• Proposed Changes to Overtime Rules – Planning for More Overtime Eligible Employees
• Pregnancy Accommodations in the Workplace
• Independent Contractor vs. Employee – An Important Distinction

Plan Now for New Overtime Rules

You may have heard that the federal Department of Labor (DOL) issued a proposed rule that would change the test for determining which employees are exempt from overtime requirements.  The rule will have the effect of greatly expanding the number of employees who will need to be paid overtime for any hours worked over 40 in a workweek.  Although the DOL does not expect to issue its final rule changing the overtime exemptions until mid-to-late 2016 now is a good time to consider which of your employees may lose their exempt status once the new rule goes into effect.

The major change is the proposal to significantly increase the minimum salary required to be paid to an employee who is an executive, administrative or professional (“white-collar”) employee.  The current requirement is that these employees must be paid a guaranteed salary of at least $455 per week ($23,660 per year).  Under the new rule, that salary threshold would increase to an estimated $970 per week ($50,440 per year) in 2016.

Once you identify employees currently considered to be exempt from overtime you can begin to plan for either maintaining the exempt status of those employees (by increasing salaries) or to communicate their new nonexempt status to employees who will no longer meet the salary requirements and consider the overtime issues that will arise.

Although the proposed rule did not change the job duties requirements for any of the exempt job positions, the DOL did request comments on those rules as well.  Therefore, the FLSA white collar exemption duty requirements could change in addition to the guaranteed salary rule after the final rule is published.

Pregnancy Accommodations in the Workplace

With recent focus on the accommodation of pregnancy-related restrictions in the workplace, it is clear that both federal and state civil rights agencies take the position that an employer must provide the same employment benefits to women affected by pregnancy, childbirth, or related medical conditions that it provides to other persons who are similar in their ability or inability to work.  This means that your light duty and leave policies may need to be reviewed to insure that you are applying them in a nondiscriminatory manner.  Also remember that Iowa employers (with 4 or more employees) are covered by the Iowa Civil Rights Act which requires unpaid leave of up to 8 weeks or whatever is medically necessary, whichever is less, for employees who are not able to work due to pregnancy-related disabilities.

Are our Independent Contractors really Employees?

This past year, the U.S. Department of Labor (DOL) issued an interpretation of the Fair Labor Standards Act (FLSA) that addressed one of its top enforcement issues:  the misclassification of workers as independent contractors. The DOL takes the position that “most workers are employees,” under the FLSA.   In reviewing a worker's classification for enforcement purposes, the DOL will look at the “economic realities” of the relationship.

The “economic realities” test includes the following factors:

1. The extent to which the work performed is an integral part of the employer's business;
2. The worker's opportunity for profit or loss depending on his or her managerial skill;
3. The extent of the relative investments of the employer and the worker;
4. Whether the work performed requires special skills and initiative;
5. The permanency of the relationship; and
6. The degree of control exercised or retained by the employer

If you are a company that uses contract labor, care should be taken to ensure that you have properly classified such workers.  Improper classification can result in back taxes, back benefits and other penalties.

If you have questions about any of these issues, feel free to contact Maureen B. Heffernan at 252-0020 or email Maureen at [email protected]