Reviewing the landscape for wage and hour issues in ’13
Eric J. Uhl
The Daily Record Newswire
With an employer-employee relations agenda set by the new Congress, employers should know what to expect in the field of wage and hour laws.
Wage and hour laws, and their accompanying regulations, already provide the basis for an ever-growing number of employment-related lawsuits. While the nature and number of the possible developments are practically unlimited, here is a list of some of the likely items on the horizon:
• Minimum wages. The push to increase the minimum wage under the federal Fair Labor Standards Act will be reinvigorated. Prior to the election, bills were introduced in Congress by Rep. George Miller, D-Calif., and Sen. Tom Harkin, D-Iowa, to raise the federal minimum wage to $9.80 an hour, and to index future increases based on the Consumer Price Index.
The move to increase the minimum wage was put on hold because of the election, but signs point to a sustained effort in 2013.
These proposals to increase the minimum wage may also include efforts to increase the cash-wage requirement for tipped employees, which means that employers will need to increase the
hourly rate paid to tipped employees as well.
• Exempt employee salary increases and paid-leave requirements. Along with the effort to increase the minimum wage, employers should be on the lookout for efforts to increase the salary amount required for some employees who are exempt from the FLSA’s minimum wage and overtime requirements, as well as efforts to impose additional paid-leave requirements.
Sen. Harkin introduced a bill in 2012 that would raise the salary levels for exempt employees and require most employers with at least 15 workers to accrue mandatory paid sick leave for every 30 hours of work time, up to at least 56 hours for each calendar year.
Currently, to qualify as an exempt employee under the FLSA’s “white collar” exemptions (certain executive, administrative and professional employees), among other requirements, the employee must be paid on a “salary basis” at least $455 a week.
Harkin’s bill would move the minimum salary basis rate to $655, then to $855, and then to $1,045 over a period of time, with future increases tied to the Consumer Price Index.
• Increases to the overtime pay rate and reduction-in-hour threshold. Supporters may try both to raise the FLSA’s overtime pay rate and lower the number of hours required to trigger the overtime rate.
For example, there may be an attempt to increase the overtime rate from 1.5 to 2.0 times the regular rate, and at the same time to decrease the number of hours required to trigger overtime from 40 a week to 35.
Multiple factors could drive these attempted changes: persistent high unemployment and a slow economic recovery (conditions in the late ’70s and early ’80s created calls for similar actions), and the current environment of increasing rates of part-time employment, which may only rise as the Affordable Care Act is implemented.
•Continued aggressive government enforcement. We have seen a recent expansion of aggressive government enforcement at federal and state levels, and that trend is likely to continue.
One area of increased enforcement was the crack down on employers’ use of “independent contractors” instead of “employees.” We can anticipate an even more intensified focus on that inquiry.
Certain industries may face particular national and regional enforcement initiatives, including industries that the U.S. Department of Labor labels “low wage” sectors — hospitality businesses and food retailing, general retailing, various health care segments, landscaping, construction segments, temporary help agencies, day care/home care, agriculture, janitorial services, garment manufacturing and guard services.
• Repeal of the home companion and live-in domestic service exemptions. The DOL held a notice-and-comment period in 2012 on rules that would essentially spell the end of the FLSA’s exemptions for companions and live-in domestic service workers.
Employers of such workers should watch for those proposals to be revived again in the near future. Under the rule changes, companion and live-in domestic service workers would no longer be exempt from the FLSA’s minimum wage and overtime requirements.
• Revival of “Right to Know” requirements. Another possible development to watch for is the revival of the DOL’s proposed “Right to Know” regulations, which would require employers to provide notice to workers of their status as employees or independent contractors and whether the worker is entitled to protection under the FLSA.
The proposal also would require employers to provide a wage statement to their employees each pay period, apparently to convey to employees “how their pay is computed.” The reach of the provisions likely would be very broad.
Employers should always maintain a high level of awareness of the current state of wage and hour issues. Given the changes that are likely to be considered in 2013, it is critically important to be on alert to ensure they are in compliance with these many, far-ranging wage and hour requirements.
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Eric J. Uhl is a partner in the Boston and Portland, Maine, offices of Fisher & Phillips.
