Massachusetts Employment Law Update Tuesday, October 22, 2019, - - PowerPoint PPT Presentation

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Massachusetts Employment Law Update Tuesday, October 22, 2019, - - PowerPoint PPT Presentation

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OConnor & Drew P.C. Auto Symposium 2019 Massachusetts Employment Law Update Tuesday, October 22, 2019, Sheraton Boston Needham Hotel Presented by: Jeffrey A. Fritz jfritz@fisherphillips.com (617) 532-9325 fisherphillips.com

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O’Connor & Drew P.C. ■ Auto Symposium 2019

Massachusetts Employment Law Update

Tuesday, October 22, 2019, Sheraton Boston Needham Hotel

Presented by: Jeffrey A. Fritz jfritz@fisherphillips.com (617) 532-9325

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Today’s Agenda

  • The Sleepy’s Debacle
  • USDOL New Overtime Rules
  • Paid Family & Medical Leave
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The Sleepy’s Debacle

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The Sleepy’s Debacle

The History

  • MA Overtime Statute excludes commissions from “regular rate of pay”
  • Overtime rate = 1.5 x RR
  • 3/14/03 DLS Opinion Letter
  • So long as commissions satisfy minimum wage and overtime obligations (i.e., MA min wage for all

hours up to 40 and 1.5x MA min wage for all time worked over 40 hours), the employer is in compliance

  • 12/21/09 DLS Opinion Letter
  • Reiterates position:
  • In computing the overtime rate for an employee who is paid on a 100 percent commission basis, the employee’s total

earnings for purposes of overtime calculation must exclude commissions. However, pursuant to 455 CMR § 2.03(3), the employee’s regular hourly rate must not be less than the minimum wage. These two provisions must be read harmoniously to effectuate a consistent body of law. A plain reading of the two provisions compels the conclusion that such an employee be paid at least the equivalent of minimum wage (currently $8* per hour) for the first 40 hours, and time and one-half minimum wage (i.e., $12* per hour) for all hours worked over 40 in a given workweek.

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The Sleepy’s Debacle

The History

  • 454 CMR § 27.03(3) – Overtime Rate (1/15)
  • Whether a nonexempt employee is paid on an hourly, piece work,

salary, or any other basis, such payment shall not serve to compensate the employee for any portion of the overtime rate for hours worked over 40 in a work week, except that this limitation

  • nly applies to the “one half” portion of the overtime rate (one

and “one half” times an employee’s regular hourly rate) when

  • vertime is determined on a bona fide fluctuating workweek

basis

  • 2016 and 2018 DLS Topical Outlines
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The Sleepy’s Debacle

The Case

  • One of a number of cases on the issue since new regs
  • Recoverable draw of $125 per day, which always equaled or

exceeded minimum wage & 1.5x min wage for all time worked over 40 and/or on Sunday

  • 9/17

Putative class action filed in MA Superior Court

  • 10/17

Removed to USDC MA

  • 6/18

Federal lawsuit stayed and 2 questions certified to SJC:

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The Sleepy’s Debacle

The Case

  • 1. If 100% commission-paid inside sales employee works more

than 40 hours, is s/he entitled to any additional comp specifically for OT hours worked when total comp (through draws and commissions) is equal to or greater than 1.5x the employee’s regular rate or at least 1.5x the min wage for all hours worked over 40?

  • If yes, how do you calculate?
  • 2. Same question for Sunday pay.
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The Sleepy’s Debacle

The Decision

  • “We conclude that draws and commissions cannot be

retroactively allocated as hourly and overtime wages and Sunday pay even if these draws and commissions equaled or exceeded the minimum wage for the employees’ first forty hours of work and one and one-half times the minimum wage for all hours worked over forty hours or on Sunday.”

  • “Rather, the employees are entitled to separate and additional

payments of one and one-half times the minimum wage for every hour the employees worked over forty hours or on Sunday.”

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The Sleepy’s Debacle

The Decision

  • “We recognize that the [DLS] opinion letters are less than a

model of clarity and may have misled the employers.”

  • Decision based largely on the “purpose” of the overtime law:
  • reduce the number of hours of work
  • encourage the employment of more persons
  • compensate employees for the burden of a long workweek
  • Interprets new regulation to prohibit retroactive “crediting” of

payments against OT obligations when “made for a different purpose” (but acknowledges language is confusing)

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The Sleepy’s Debacle

Is This Retroactive?

  • Three-Factor Test
  • whether new principle established whose resolution was not clearly

foreshadowed

  • whether retroactive application will further the rule
  • whether inequitable results, injustice, or hardships will be avoided by

a holding of non-retroactivity

  • If retroactive,
  • 3-year statute of limitations
  • Class actions
  • Automatic treble damages
  • Attorneys’ fees costs (yours and theirs)
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The Sleepy’s Debacle

If Retroactive

  • Example:
  • Assume ten 100% commissioned Salespeople each earned

$15K in commissions each month (amounting to $180K annually)

  • Assume each worked 50 hours per week
  • OT due per Salesperson per week = $180 ($18/hr x 10 hrs)
  • x 52 wks/yr x 3 yrs = $28,080
  • x 10 Salespeople = $280,800
  • x 3 (auto trebling) = $842,400
  • plus attorneys’ fees and costs (yours and theirs)
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The Sleepy’s Debacle

Can This Be Fixed?

  • Through the courts?
  • Through the legislature?
  • Retroactively?
  • Prospectively?
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The Sleepy’s Debacle

What Should You Do Now?

  • Hope Sleepy’s decision not held retroactive (and/or you’re not sued)
  • Limit or eliminate overtime of commissioned employees
  • Pay additional $18* per hour (separate and apart from commissions) for

all time worked since May 9, 2019:

  • over 40 hours per week, and/or
  • on a Sunday (or a MA Blue Law premium pay holiday*)
  • Consider paying additional $12 per hour (separate and apart from

commissions) for any time worked up to 40 hours per week

  • Assess finances over time and make any necessary adjustments to

commission level

  • Assess whether to pay historical single “damages” to avoid treble
  • Increase amounts to keep up with minimum wage hikes in coming years
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USDOL New Overtime Rules

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USDOL New Overtime Rules

The Basics

  • White Collar Exemptions
  • Executive
  • Administrative
  • Professional
  • Not salespeople, parts counter, mechanics, etc.
  • Duties Test
  • Salary Basis Test
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USDOL New Overtime Rules

Duties Tests

  • Executive Exemption
  • Primary duty is management of department or sub-department
  • Supervises work of 2 or more full-time employees
  • Has authority to hire and fire
  • Administrative Exemption
  • Primary duty is performance of work directly related to management

policies or general business operations (staff v. production work)

  • Primary duty includes exercise of discretion and judgment with

respect to matters of significance

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USDOL New Overtime Rules

Salary Basis Test

  • Fixed amount of compensation each pay period on a weekly,
  • r less frequent, basis that is not reduced based on variations

in quality or quantity of work

  • Since 2004, $455 per week ($23,660 per year)
  • Limited bases for deductions, such as:
  • Absent from work for one or more full days for personal reasons other than

sickness or disability

  • Absent from work for one or more full days due to sickness or disability if

made in accordance with bona fide plan, policy, or practice of providing compensation for salary lost due to illness

  • Offset amounts received as jury or witness fees, or military pay
  • Be careful: improper deductions can jeopardize exemption
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USDOL New Overtime Rules

Highly Compensated Employees

  • Earns total annual compensation of $100,000*
  • Primary duty includes performing office or non-manual work
  • Customarily and regularly performs at least one of the white

collar duties

  • Paid on at least same salary basis
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USDOL New Overtime Rules

Beginning January 1, 2010

  • Salary threshold increases from $455 to $684 per week
  • $23,660 to 35,568 annually
  • HCE annual salary increases to $107,432
  • Employers can use nondiscretionary bonuses and incentive

payments (including commissions) paid at least annually to satisfy up to 10% of salary threshold (i.e., $68.40)

  • Not for HCE
  • No change to Duties Tests
  • Expect more frequent updates
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Status of USDOL Overtime Rule

What Should You Do Now?

  • Review your pay plans
  • Are they truly exempt currently?
  • Would they continue to be exempt after FLSA changes go into

effect?

  • Any inappropriate or undefined deductions? Are you being

straightforward and clear?

  • Make any changes necessary to ensure compliance
  • Rule change opportunity to dilute impact of other “fixes?”
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Exposure for Violations

  • Back wages (assume 3-year statute of limitations)
  • Liquidated damages (double back wages) under FLSA
  • Automatic triple damages under MA Wage Act
  • Attorneys’ fees and costs
  • Interest
  • Civil monetary penalties (amounts adjusted annually)
  • Possible criminal penalties
  • Court-ordered compliance in future (possible contempt)
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Paid Family and Medical Leave

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Paid Family & Medical Leave

Family Leave Coverage

  • Beginning January 1, 2021:
  • Up to 12 weeks to bond with child within first 12 months of birth or

placement or adoption/foster placement

  • Up to 12 weeks for “any qualifying exigency” stemming from family

member’s active duty or impending call to active duty in military

  • Up to 26 weeks to care for family member who is covered service

member

  • Beginning July 1, 2021:
  • Up to 12 weeks to care for family member with serious health

condition (SHC)

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Paid Family & Medical Leave

Medical Leave Coverage

  • Beginning January 1, 2021:
  • Up to 20 weeks of leave for a covered individual with SHC
  • In-patient care in hospital, hospice, or residential medical facility
  • Continuing treatment by health provider
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Paid Family & Medical Leave

Leave Allowed

  • Intermittent leave allowed:
  • To care for birth/adoption of child only where employer and employee

both agree

  • To care for:
  • family member who is covered service member
  • family member with SHC when medically necessary
  • own SHC
  • At any time for qualifying exigency arising out of family active (or

impending) call to duty

  • Aggregate leave allowed:
  • Up to 26 weeks in single Benefit Year
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Paid Family & Medical Leave

Covered Individual

Federal FMLA MA FMLA Employed at least 12 consecutive or non-consecutive months No similar requirement* Worked 1,250 hours over prior 12 months No similar requirement 50 or more employees within 75-mile radius No similar requirement No financial eligibility requirement Must meet certain financial eligibility requirements (MGL c. 151A, § 24 - Unemployment) Only current employees Current employees and former employees up to 26 weeks later and potentially independent contractors

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Paid Family & Medical Leave

Return from Leave

  • Must restore employee to previous or equivalent position
  • Same pay, status, employment benefits, length of service credit, and

seniority as of date of leave

  • Exception:
  • where other employees of equivalent or same positions have been

laid off due to economic conditions or other changes in operating conditions affecting employment

  • Narrower than Federal FMLA
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Paid Family & Medical Leave

Benefits

  • FMLA “shall not” affect employee’s right to accrue:
  • Vacation time
  • Sick leave
  • Bonuses
  • Advancement
  • Seniority
  • Length of service credit
  • Other benefit plans or programs – must continue to provide and

contribute to employee’s health insurance benefits at same level

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Paid Family & Medical Leave

Notice Requirements

  • Yet another poster
  • English and perhaps other languages
  • Written notice
  • Explanation of benefits
  • Employee contribution amounts
  • Employer’s contribution amounts
  • Employer contact information
  • Claim filing information
  • Written acknowledgement required
  • $50 penalty/1st offense → $300 penalty/subsequent
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Paid Family & Medical Leave

Notice Requirements

  • Employee must give at least 30 days’ (or “as soon as

practicable”) notice of anticipated start date, length of leave, and expected return date

  • Waived if employer fails to provide employee with proper FML

workplace notice

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Paid Family & Medical Leave

Contributions

  • 0.75% of employee’s gross wages or other payment per pay

period

  • If less than 25 employees (on average), employer can pass entire tax

to employees

  • If 25 or more employees, employer must pay must pay at least

0.372% (and, accordingly, can pass on 0.378% to employees)

  • 60% of medical leave and 0% of family leave
  • Only on first $132,900 in wages (2019 SS base limit)
  • Will be adjusted annually
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Paid Family & Medical Leave

No Retaliation

  • Retaliation (termination, suspension, discipline, threatening, etc.) PROHIBITED
  • For exercising rights under MA FMLA; or
  • For filing complaint or instituting proceeding concerning statute
  • Presumption of Retaliation
  • Negative change to seniority, status, benefits, pay, etc. within 6

months of (a) employee’s leave, or (b) termination of proceeding

  • Rebuttable only with “clear and convincing” evidence showing:
  • not retaliatory,
  • sufficient independent justification; and
  • would have taken such action regardless
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Paid Family & Medical Leave

Violations

  • 3-year statute of limitations
  • Civil actions
  • Treble damages for lost wages, benefits, etc.
  • Attorneys’ fees and costs (yours and theirs)
  • Temporary restraining orders
  • Reinstatement of employee to same or equivalent position
  • Reinstatement of full fringe benefits and seniority rights
  • Rescission of adverse action
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Thank You

Presented by: Jeffrey A. Fritz jfritz@fisherphillips.com (617) 532-9325