|
APPLIES TO
Federal Government Employees & Federal Contractors
|
EFFECTIVE
September 30, 2023 |
QUESTIONS?
Contact HR On-Call
(888) 378-2456
|
Quick Look
- On September 30, 2023, the U.S. Senate passed a last-minute continuing resolution that will keep federal agencies open until November 17, 2023.
- If, by November 17, 2023, Congress has not achieved a longer-term government funding solution, the government may face the threat of a shutdown, with various employment-related impacts on federal employees and government contractors.
|
Discussion
On September 30, 2023, the U.S. Senate passed a last-minute continuing resolution that will keep federal agencies open until November 17, 2023. President Biden signed the short-term spending bill just before midnight on September 30, 2023, temporarily averting a government shutdown that would have impacted millions of federal government employees and contractors.
The temporary funding bill allows the government to stay open for 45 days, giving the House and Senate more time to finish their funding legislation negotiations. However, if at the end of that 45-day period Congress has not reached an agreement that would grant the government a longer-term funding solution, the nation will face the threat of another potential government shutdown.
Who is impacted by a government shutdown?
All federal agencies are required to maintain contingency plans in the event of a government shutdown. Many of these contingency plans require reduced or no pay for federal workers, and in some cases, a forced furlough of thousands of government employees. Federal law says that employees who are in “non-essential” roles are prohibited from working during a lapse in government funding. With more than 800,000 government employees designated as “non-essential,” many federal operations may come to a standstill as a result of a potential shutdown.
Alternatively, those federal employees whose absence would endanger life or property, or whose responsibilities derive from the Constitution, are required to continue working, albeit with delayed paychecks or no paychecks during the shutdown period. This would include the almost 2-million United States military personnel who would be required to continue to perform their duties throughout the shutdown.
In past government shutdowns, federal employees have eventually received backpay. However, backpay was not fully guaranteed until 2019. A shutdown this year would be the first time all federal employees are guaranteed backpay ahead of a shutdown period.
Also impacted by a looming shutdown is the expansive group of government contractors who work for outside firms that are hired and funded by government agencies. A shutdown may present similar issues for federal contractors, who may also experience wage payment delays or potential furloughs. Unlike federal employees, government contractors are not guaranteed back pay once the shutdown is over.
What is a furlough?
A furlough is a temporary leave of absence initiated by an employer, typically due to economic hardship or a lack of available work. Employees affected by furloughs are required to take temporary time off, usually without pay. Furloughed employees technically remain employed; however, they may have the opportunity to seek temporary employment elsewhere, subject to any applicable state regulations or corporate policies.
A furlough is distinct from a layoff, which entails the permanent termination of an employee, usually related to economic or business reasons. Notably, furloughs are not used to address employee misconduct, which is a subject addressed by employee discipline or termination.
Are there EEO considerations associated with a furlough?
As always, when making any decisions impacting the terms, conditions, or privileges of an individual’s employment, employers must refrain from any unlawful, discriminatory, or retaliatory action. This requires that, when selecting employees for furlough or a reduction in working hours, employers use consistent and articulable metrics that are evenly applied across their workforce, and which are consistent with the company’s legitimate business interests (e.g., newest hired, department shutdown, etc.). Otherwise, employers may risk exposure for claims of discrimination or retaliation.
What are the wage and hour considerations associated with a furlough?
Under the federal Fair Labor Standards Act (FLSA), exempt employees must be paid the same minimum salary for each pay period in which they perform any amount of work (with limited exceptions). Notably, the FLSA cautions that employers may not make deductions to an exempt employee’s predetermined salary for absences “occasioned by the employer” or caused by “the operating requirements of the business.” Therefore, while an employer may withhold payment for a full week in which the exempt employee does not work at all, the employer cannot reduce an exempt employee’s salary based on a partial week in which the employee did not perform work. Doing so may jeopardize the employee’s exempt status by violating the “salary-basis” requirements.
Additionally, under the FLSA, employers must compensate non-exempt workers for any work actually performed. Because of this, employers should carefully instruct both exempt and non-exempt furloughed employees not to perform any work while on furlough status. This may include a restriction on email access or revocation of company-issued phones to ensure that employees are not performing any type of work-related duties while on furlough.
Before taking any action with respect to wage and hour reductions for exempt or non-exempt employees during a furlough, employers are encouraged to speak with legal counsel about proper compliance with applicable federal, state and local wage and hour laws.
Does a furlough require notice under the WARN Act?
The federal Worker Adjustment and Retraining Notification (WARN) Act took effect in 1989 to protect workers, their families, and communities by ensuring workers receive advance notice about qualified plant closings and mass layoffs. Notably, the WARN Act requires an “employment loss,” which is defined as: (1) an employment termination; (2) a layoff exceeding six months; or (3) a reduction in an employee’s hours of work of more than 50 percent in each month of a six-month period.
That said, federal, state, and local government entities that provide public services are not covered by the WARN Act, and therefore, federal employees furloughed due to an impending government shutdown would not be entitled to the advance notice requirements. On the other hand, government contractors may be subject to the WARN Act’s requirements, depending on the circumstances of the furlough.
Traditionally, the WARN Act’s notice requirements do not apply to furloughs if the employer communicates that the furlough is temporary and that employees can expect to return to work within six months. Because an anticipated government shut down is unlikely to exceed six months, the WARN Act is unlikely to be triggered for most government contractors. However, if circumstances change and a temporary furlough extends beyond six months or becomes a permanent layoff, then the WARN Act’s notice obligations may be triggered.
Despite the WARN Act’s seemingly straightforward application, the U.S. Department of Labor (DOL) issued a guidance letter in 2012 urging government contractors not to issue WARN notices when facing the increased possibility of sequestration. The DOL’s rationale that government contractors were not entitled to the WARN Act’s notice requirements was premised on the fact that contractors did not know specifically who was going to be laid off, and further, whether they would even be affected by the sequestration. Because of this, the DOL opined that government contractors did not have the appropriate information to provide proper WARN notices, until such time that specific closings or mass layoffs became “reasonably foreseeable.” The DOL could interpret the circumstances surrounding a government shutdown similarly, however, they have not specifically addressed the situation in recent guidance. More significantly, there is no guarantee that a court reviewing the matter would give deference to the DOL’s opinion.
While the DOL is not the entity that enforces the WARN Act, they do provide compliance assistance materials that employers may consult to determine at what time certain notice obligations may be triggered. There may also be state-specific laws that apply (i.e., “mini-WARN laws”) regarding long-term furloughs or permanent reductions in force that impose notice requirements distinct from the WARN Act. Because of these complexities, employers are encouraged to speak with legal counsel to determine their compliance obligations for providing any advance notice to employees ahead of a shutdown period.
Are furloughed workers eligible for unemployment compensation?
Furloughed employees may become eligible for unemployment compensation; however, unemployment compensation requirements will differ by state. Some states may require a one-week waiting period before an individual qualifies for payments, whereas some do not. Additionally, certain states typically require proof that an individual is seeking work to qualify for unemployment compensation, but this requirement may be suspended for furloughed workers impacted by the government shutdown.
Federal employees who qualify for unemployment compensation during furloughs often must return the money after the government reopens and they receive retroactive back pay. Government contractors who receive unemployment compensation, and who do not receive retroactive backpay, may not be required to return the money once they have been restored to their prior positions.
Government employees who are required to continue to work without pay during the furlough are not eligible for unemployment compensation, per the U.S. State Department’s Furloughed Employees Handbook.
Do furloughed workers remain eligible to participate in an employer’s benefits plan?
Health insurance coverage generally continues for federal employees during a shutdown. Agencies continue to process transactions for the Federal Employee Health Benefits (FEHB) program (among others); however, employee premium payments are typically paused during a shutdown. Once the shutdown ends, furloughed employees will begin repaying accumulated FEHB premiums through a payroll withholding.
For furloughed government contractors, the question of benefits eligibility is not as straightforward. Most employer benefits plans set forth certain eligibility requirements, such as a minimum number of working hours required for eligibility in the plan. As a result of a furlough, impacted government contractors will experience a reduction in their working hours, which may cause them to drop below the minimum number of hours required to remain eligible for their employer’s benefits plan. If an impacted employee drops below the required number of hours, employers may need to terminate the employee’s benefits, pursuant to their plan’s documents.
Employers of government contractors should review their plan documents to determine eligibility requirements and speak with their plan administrators about preparations needed to potentially terminate coverage.
Is a furlough a COBRA-qualifying event?
If a reduction in an employee’s hours causes them to lose coverage under the terms of the employer’s COBRA-covered health plan, the employer is required to send out qualifying event notices to impacted employees. Impacted employees and their qualified beneficiaries must be offered the opportunity to continue coverage during the furlough period at their own expense, up to the maximum COBRA continuation period.
Takeaways
While this list is not exhaustive, it illustrates that a government shutdown requires careful consideration of various employment-related issues, including those related to wage and hour, employee benefits, the WARN Act, and anti-discrimination concerns. In the event that a longer-term funding solution is not achieved by the November deadline, employers who expect to be impacted by a potential government shutdown should consult with legal counsel regarding their specific compliance obligations and begin necessary preparations now.
Action Items
- Continue to monitor updates to Congress’ funding legislation negotiations.
- Consult with legal counsel regarding specific compliance obligations in the event of a government shutdown.
Disclaimer: This document is designed to provide general information and guidance concerning employment-related issues. It is presented with the understanding that ManagEase is not engaged in rendering any legal opinions. If a legal opinion is needed, please contact the services of your own legal adviser. © 2023 ManagEase
Eleventh Circuit: FLSA Exemption Tests Clarified
/in HR Alerts /by ManagEaseAPPLIES TO
All Employers with AL, FL, and GA Employees
EFFECTIVE
September 11, 2023
QUESTIONS?
Contact HR On-Call
(888) 378-2456
Discussion
In Wilson v. Schlumberger Tech. Corp., the Eleventh Circuit Court of Appeals clarified how the Fair Labor Standards Act (FLSA) overtime exemption applies. The FLSA regulations provide two options for an employer to prove that an employee is exempt from receiving overtime pay: (1) the employee receives the minimum weekly salary basis and may receive additional compensation paid on any basis; and (2) the employee’s earnings may be computed on an hourly, daily, or shift basis if they are guaranteed at least the minimum weekly required amount paid on a salary basis regardless of the number of hours, days or shifts worked, and a reasonable relationship exists between the guaranteed amount and the amount actually earned.
Here, an employee received a guaranteed base meeting the minimum exempt salary threshold regardless of the number of hours, days, or shifts worked, in addition to other hourly rates and bonuses depending on the situation. However, his hourly and bonus pay significantly exceeded the salary pay. The question became whether the first or second exemption test applied.
Ultimately, the court said that the first test applies when an employee receives a base salary and additional compensation, and the second test applies when an employee is merely guaranteed a minimum salary but is typically paid on an hourly, daily, or shift basis. Because the employee here received a fixed base salary and additional compensation in the form of hourly rates and other bonuses, the first test applied.
Action Items
Disclaimer: This document is designed to provide general information and guidance concerning employment-related issues. It is presented with the understanding that ManagEase is not engaged in rendering any legal opinions. If a legal opinion is needed, please contact the services of your own legal adviser. © 2023 ManagEase
Eleventh Circuit: EEO Form Data Does Not Evidence Discrimination
/in HR Alerts /by ManagEaseAPPLIES TO
All Employers with AL, FL, and GA Employees
EFFECTIVE
September 8, 2023
QUESTIONS?
Contact HR On-Call
(888) 378-2456
Discussion
In Ossmann v. Meredith Corp., the Eleventh Circuit Court of Appeals said EEO form data does not contain the evidence necessary to show a termination was a pretext for racial discrimination. Here, the plaintiff was a long-time meteorologist for a CBS television station in Georgia. During his employment, several female co-workers repeatedly complained that he engaged in sexual harassment. The complaints included explicit comments about sexual dreams involving the female coworkers, requests for nude photos, inappropriate sexual Facebook messages, descriptions of sexual acts, and unwanted comments about their physical appearance. During the course of these complaints, the HR Director and direct supervisor met with the plaintiff to remind him of the company’s zero-tolerance policy on workplace harassment and provided him with written warnings. This process continued until his suspension and ultimate termination. The plaintiff sued the television station alleging he was terminated not for sexual harassment violations but for race discrimination in violation of 42 U.S.C. § 1981.
The plaintiff pointed to an EEO Analysis that was required by the television station for any discharge, job elimination, restructuring or reorganization as evidence of discrimination. The document contained space to record the complaints made and the company’s response and listed the plaintiff’s race, sex, and age. There was also space to include comparisons with employees who had been in similar situations and the result. The demographics of those employees was also recorded. The plaintiff alleged the listing of his demographic information “tainted the decisionmaking process.”
The court ultimately concluded that this documentation does not “remotely approach the amount of evidence necessary for a reasonable jury to conclude that [the plaintiff] was fired because of his race.” The form, in actuality, documented the specific incidents of sexual harassment. A termination is not race-based just because racial data is included in the documentation. The documentation did not require engaging in “racial balancing” to determine an outcome. There was no evidence of intentional discrimination against the plaintiff based on race.
Action Items
Disclaimer: This document is designed to provide general information and guidance concerning employment-related issues. It is presented with the understanding that ManagEase is not engaged in rendering any legal opinions. If a legal opinion is needed, please contact the services of your own legal adviser. © 2023 ManagEase
California: Demographic Reporting by Venture Capital Companies
/in HR Alerts /by ManagEaseAPPLIES TO
Applies to Venture Capital Companies with Invested Companies in CA
EFFECTIVE
January 1, 2024
QUESTIONS?
Contact HR On-Call
(888) 378-2456
Discussion
SB 54, Fair Investment Practices by Investment Advisers, requires venture capital companies to collect and report data on the demographic composition of the founding teams of the companies in which they invest.
“Venture capital company” is defined as an entity that satisfies one or more of the following conditions: (1) on at least one occasion during the annual period commencing with the date of its initial capitalization, and on at least one occasion during each annual period thereafter, at least 50% of its assets (other than short-term investments pending long-term commitment or distribution to investors), valued at cost, are venture capital investments; (2) the entity is a “venture capital firm” under the Investment Advisers Act of 1940; or (3) the entity is a “venture capital operating company” under the Employment Retirement Income Security Act of 1974. This may include companies such as private equity firms, accelerators, or investor groups.
Venture capital companies must comply with the reporting obligations if they (1) either primarily engage in the business of investing in, or providing financing to, startup, early-stage, or emerging growth companies, or manage assets on behalf of third-party investors; and (2) either are headquartered in California, have a significant presence or operational office in California, make venture capital investments in businesses that are located in or have significant operations in California, or solicit or receive investments from a person who is a resident of California.
Venture capital companies must report to the Civil Rights Department (CRD) information relating to aggregate demographic information about the founding team of companies in which investments were made (i.e., gender identity, race, ethnicity, disability status, sexual orientation, veteran status, California residency status, and whether information was declined to be provided); the number and amount of investments; and the principal place of each company in which an investment was made. The CRD will provide a survey form to use for this purpose. Surveys can only be provided to founding members when the venture capital company has executed an investment agreement with the business and made the first transfer of funds. Founding members respond to the surveyed information on a voluntary basis and the venture capital company cannot take retaliatory action against them for refusing to provide the data.
The first reporting deadline will be March 1, 2025 for data obtained in 2024. The aggregated data will be published on the CRD’s website. Records must be kept for at least four years following reporting to the CRD. Failure to comply with the requirements may result in court enforcement, penalties, attorneys’ fees, and other relief. Although the bill was signed by the governor, he committed to proposing language in the next proposed budget to clarify the requirements.
Action Items
Disclaimer: This document is designed to provide general information and guidance concerning employment-related issues. It is presented with the understanding that ManagEase is not engaged in rendering any legal opinions. If a legal opinion is needed, please contact the services of your own legal adviser. © 2023 ManagEase
California: Newly Permitted Electronic Notices
/in HR Alerts /by ManagEaseAPPLIES TO
All Employers with Employees in CA
EFFECTIVE
January 1, 2024
QUESTIONS?
Contact HR On-Call
(888) 378-2456
Discussion
Employers must provide employees with notice regarding the availability of federal and state Earned Income Tax Credits (EITC) as well as unemployment insurance (UI) benefits. AB 1355 permits those notices to be provided to employees via email if an employee affirmatively, and in writing or by electronic acknowledgment, opts into receipt of electronic statements or materials. In the case of UI benefit notices, the electronic acknowledgment must fully explain that the employee is agreeing to electronic delivery of the notice, provide the employee with information about how they can revoke consent to electronic receipt, and create a record of the employee’s agreement to electronic delivery of the notice.
An employer cannot discriminate, retaliate, or take any adverse action against an employee who does not opt into receipt of electronic statements or materials. These permissions remain in effect until January 1, 2029.
The EITC notice must be provided within one week before or after, or at the same time, that the employer provides an annual wage summary, including, but not limited to, a Form W-2 or a Form 1099, to any employee. The notice must be provided a second time in March, but has been permitted to be delivered electronically. The UI benefits notice must be provided at the time of termination.
Action Items
Disclaimer: This document is designed to provide general information and guidance concerning employment-related issues. It is presented with the understanding that ManagEase is not engaged in rendering any legal opinions. If a legal opinion is needed, please contact the services of your own legal adviser. © 2023 ManagEase
Illinois: Proposed Regulations and Updated FAQs for Paid Leave Law
/in HR Alerts /by ManagEaseAPPLIES TO
All Employers with Employees in IL
EFFECTIVE
January 1, 2024
QUESTIONS?
Contact HR On-Call
(888) 378-2456
Discussion
New FAQS on IPLAWA
On October 18, 2023, the Illinois Department of Labor (IDOL) published updated FAQs for the upcoming Illinois Paid Leave for All Workers Act (IPLAWA). The IDOL also held several informational webinars to address implementation of the IPLAWA. Key takeaways that employers should be aware of include:
Employer’s Pre-Existing PTO Policies. If employers have an existing paid time off policy that provides at least 40 hours of paid leave that can be used for any reason within a 12-month period, they can keep that policy and do not need to abide by the other provisions set forth in the IPLAWA. However, employers must ensure that their pre-existing policy is in place by January 1, 2024, and that it identifies that leave under the policy may be credited against any paid leave entitlement that the employee may have under the IPLAWA.
Denying IPLAWA Based on Operational Needs. The IDOL clarified that nothing in the IPLAWA prohibits employers from adopting a policy that establishes parameters for taking leave, and that employers may deny leave under the law for limited reasons based on the employer’s operational needs (e.g., seasonal, too many people taking leave at the same time, minimum staffing requirements for operations, etc.). However, the FAQs make clear that if an employer is going to deny leave for operational reasons, the employer must include what factors are to be considered and what circumstances may result in denial as part of their written leave policy. The policy must be communicated to all employees and evenly applied.
Proposed Regulations
In addition to the updated FAQs, the IDOL also issued its proposed regulations for implementing the IPLAWA. The proposed regulations are subject to a 90-day notice period before the regulations can be finalized, and the IDOL has indicated that they expect finalized rules to be issued before March 31, 2024. Although they may change during the rulemaking process, employers should be aware of the proposed regulations which are summarized below.
Employer’s Pre-Existing PTO Policies. In line with the FAQs, the proposed regulations also addressed a broad exemption for employers with pre-existing PTO policies. The regulations confirm that employers with a PTO policy that offers employees at least 40 hours of PTO that can be used for any reason per year do not need to change their policies, even if the pre-existing PTO policy provisions do not align with the IPLAWA on other issues (i.e., increment of use, advance notice/pre-approval provisions, and carryover).
Remote Employee Coverage. To address coverage of remote employees, the proposed regulations define an “employee” as one who: (1) works for an employer whose base of operations, regional office, or headquarters is in Illinois and that employee’s work is primarily performed in Illinois; or (2) primarily performs work in Illinois for an employer that performs substantial business in the state, markets its services in the state, or maintains a registered agent within the state of Illinois; or (3) primarily performs work in Illinois and resides in Illinois. When considering whether work is “primarily performed in Illinois,” IDOL will consider the following factors: (a) the ratio of work performed in Illinois versus outside of Illinois; (b) whether the work performed in Illinois is isolated, temporary, or transitory; and (c) whether the work performed outside of Illinois is of the same nature or has the same duties of the work performed in Illinois.
Accrual of Leave. Under the regulations, paid leave accrues at a rate of one hour for every 40 hours worked, but the calculation must be made on a fractional basis based on 15-minute work increments. For example, if an employee works for 75 hours in a biweekly pay period, they will accrue 1.875 hours of paid leave. Practically, this may result in employees accruing leave faster than the law requires. The proposed regulations require that employers always round up, regardless of where on the “dividing line” the time worked exists.
Leave Carryover. Under the IPLAWA, “all” accrued but unused leave must be carried over from one 12-month period to the next. However, the proposed regulations permit employers to establish a policy that caps leave carryover at 80 hours of unused paid leave. Employers can likely expect some additional guidance on this topic specifically, as the proposed regulations move through the rulemaking process.
Use of Leave. Employees may choose to use their paid leave before using any other leave benefits provided by the employer or state law. Similarly, employees can choose to use other leave benefits provided by the employer or another state law before using their accrued paid leave under IPLAWA. For recordkeeping, if employers provide more than one type of leave, the employer should confirm and document what category of leave the employee wishes to draw from for each absence.
Overlap with Local Laws. The proposed regulations confirm that the IPLAWA does not apply to employers located in a municipality where the employer is required to provide paid leave (including paid sick leave) to an employee, but will apply to employers located in a municipality that has “opted out” of the Cook County Earned Sick Leave Ordinance. If either Chicago or Cook County amend their ordinances after January 1, 2024, the employer must comply with the law that provides more generous paid leave benefits to employees.
Employer Reporting and Notice Requirements. The regulations outline several additional reporting and notice requirements that employers must abide by under the IPLAWA. In addition to the IDOL required notice, written policy, and recordkeeping requirements that are specifically outlined in the Act, the proposed regulations require the following:
Action Items
Disclaimer: This document is designed to provide general information and guidance concerning employment-related issues. It is presented with the understanding that ManagEase is not engaged in rendering any legal opinions. If a legal opinion is needed, please contact the services of your own legal adviser. © 2023 ManagEase
Massachusetts: Updates to PFML
/in HR Alerts /by ManagEaseAPPLIES TO
All Employers with MA Employees
EFFECTIVE
As Indicated
QUESTIONS?
Contact HR On-Call
(888) 378-2456
Discussion
Effective November 1, 2023, amendments to the Massachusetts Paid Family and Medical Leave law (PFML) now allow employees of both private plans and state plans to “top off” their wage replacement benefits with available accrued paid leave up to 100% of wage replacement. Previously, only private plan employers had the option to allow employees to “top off” their wage replacement benefits with accrued paid leave. State plan employers were restricted in their ability to allow employees to use accrued time off to supplement their leave benefits. Employees must now be provided with the choice to “top off” or save their paid leave. Additional guidance is expected from the Department of Paid Family and Medical leave to help employers with timely payment and calculations.
The 2024 contribution rates and weekly benefits have also been issued. Employers with 25 or more employees will have a 0.88% contribution rate of eligible wages. The contribution is divided between the employee and employer share. Employers with less than 25 employees will have a contribution rate of 0.46%. These small employers do not have to contribute an employer’s share. The maximum weekly benefit amount will also be $1,149.90, effective January 1, 2024.
Action Items
Disclaimer: This document is designed to provide general information and guidance concerning employment-related issues. It is presented with the understanding that ManagEase is not engaged in rendering any legal opinions. If a legal opinion is needed, please contact the services of your own legal adviser. © 2023 ManagEase
Massachusetts: Proposed Pay Transparency and Pay Data Reporting Requirements
/in HR Alerts /by ManagEaseAPPLIES TO
All Employers with 25+ MA Employees
EFFECTIVE
Pending
QUESTIONS?
Contact HR On-Call
(888) 378-2456
Discussion
HB 4109 may soon require pay transparency in job listings and pay data reporting for Massachusetts employers. Under the proposed pay transparency requirements, employers with 25 or more employees must: (1) disclose the salary or wage range for a position in all job postings; (2) provide the salary range to employees who are offered promotions or transfers; and (3) provide the pay range to employees for their current role, if requested. The pay range must be the annual salary range or hourly wage range that the covered employer reasonably and in good faith expects to pay for such position at that time.
The pay data reporting requirements will apply to private employers with 100 or more employees. Covered employers must submit an EEO data report that includes workforce demographic and pay data categorized by race, ethnicity, sex, and job category. The underlying EEO report will not be considered a public record subject to disclosure, but the data will be aggregated and posted on the Massachusetts Department of Labor website. Notably, there is no private right of action in the law, and the Attorney General’s Office will be in charge of enforcement. The Office will have the power to seek declaratory or injunctive relief and impose fines for violations. Fines can range from $500 to $25,000 per violation, depending on the circumstances.
There was a similar bill in the Senate which is now being reconciled with the House bill. Once the two bills are reconciled, it will head to the Governor who is expected to sign. The law would go into effect one year from the date of signature. Employers should use that time to review their pay practices for compliance.
Action Items
Disclaimer: This document is designed to provide general information and guidance concerning employment-related issues. It is presented with the understanding that ManagEase is not engaged in rendering any legal opinions. If a legal opinion is needed, please contact the services of your own legal adviser. © 2023 ManagEase
November Updates
/in HR Alerts /by ManagEaseAPPLIES TO
Varies
EFFECTIVE
Varies
QUESTIONS?
Contact HR On-Call
(888) 378-2456
OFCCP Updates Complaint Filing Process
On November 1, 2023, the U.S. Department of Labor’s Office of Federal Contract Compliance Programs (OFCCP) updated its intake process by introducing a new Pre-Complaint Injury Form (CC-390) and an updated Complaint Form (Form CC-4). A pre-complaint inquiry is not the same as filing a complaint; it allows employees and applicants to share their concerns about employment discrimination and can assist in determining if filing a complaint with OFCCP is the right choice. Employees and applicants who believe an employer doing business with the Federal government has discriminated against them in employment, or in applying for employment, may submit a pre-complaint inquiry or file a discrimination complaint with OFCCP. The employee may also submit a pre-compliant inquiry or complaint if they believe their employer discharged or otherwise discriminated against them for inquiring about, discussing, or disclosing information regarding their pay or the pay of their co-workers, subject to certain limitations. The OFCCP’s website also includes additional information and frequently asked questions about the pre-complaint inquiry and complaint filing process.
OSHA Issues New Fact Sheets on Heat Illness Prevention
OSHA has released new resources for employers and employees as part of their ongoing heat illness prevention efforts. The new fact sheets provide information on personal risk factors, the importance of employee hydration status, and pregnant worker safety in the heat. These new fact sheets have been added to OSHA’s library of other resources designed to educate employers and employees on how to reduce the threat of heat stroke and other heat-related illnesses, as well as what responsibilities employers have to prevent heat-related illness and ensure a safe working environment for employees.
Proposed Rule to Update H1-B Program
On October 23, 2023, the Department of Homeland Security issued a proposed rule to update the H1-B program. Of note, the proposed rule provides clarification on specialty occupations, including a required direct relationship between the required degree field and the duties of the position; the test for determining specialty occupation status has also been condensed; it codifies the deference policy to ensure consistent adjudications; the definition of employers who are exempt from the annual statutory limit on H-1B visas has been modernized; the proposed rule provides further benefits and flexibilities in the regulations; and it implements protections against fraud and gaming the system. The comment period will close December 22, 2023. Employers should continue to look for updates on the final rule.
Federal Contractor Minimum Wage Increases in 2024
Starting January 1, 2024, federal contractors must pay employees a minimum wage of $12.90 per hour, and tipped employees performing work on or in connection with covered contracts must be paid $9.05 per hour.
Second Circuit: Clarification on Pleading Standard for FLSA Overtime Claims
On October 16, 2023, in Herrera v. Commes Des Garcons, et al., the Second Circuit Court of Appeals stated that, when brining a claim for unpaid overtime wages, plaintiffs only need to allege that they worked unpaid hours over 40 each week that they were employed as part of their regularly scheduled workweek. No week-by-week recounting of the hours worked is necessary as part of the initial pleading. Notably, this decision may also affect the pleading standard for overtime claims under New York Labor Law (NYLL), as New York courts analyze pleading standards for the NYLL in accordance with the FLSA.
Alabama: Overtime Wages Excluded from Tax Withholding
Effective December 3, 2023, overtime wages paid to full-time hourly employees will be excluded from Alabama withholding tax from January 1, 2024 through June 30 2025. This rule does not apply to salaried or other alternative payment methods made to employees. Additional reporting related to overtime wages when filing withholding tax returns are also required. Employers are required to report the total amount of exempt overtime wages for the filing period and the total number of employees paid such wages. Lastly, employers are permitted to comply with the new reporting requirements electronically. There are several aspects to these changes so employers should review the new rules carefully to update their payroll processes.
California: Computer Software Exemption Salary Increase
In accordance with annual increase requirements, the Department of Industrial Relations adjusted the computer software employee’s minimum hourly rate of pay exemption from $53.80 to $55.58, the minimum monthly salary exemption from $9,338.78 to $9,646.96, and the minimum annual salary exemption from $112,065.20 to $115,763.35, effective January 1, 2024.
California: Reimbursed Food Handler Training Costs
Food handlers must obtain food handler cards only from American National Standards Institute (ANSI) accredited training providers following successful completion of required training courses. As of January 1, 2024, SB 476 requires employers to pay for the time employees take to complete the mandated training and examination. Employers must also pay the employee for any necessary expenditures or losses associated with obtaining a food handler card. The employee must be relieved of all other work duties while they are taking the training course and examination. Employers cannot condition employment on an applicant or employee having an existing food handler card.
Chicago, IL: Subminimum Wage Eliminated for Tipped Employees
On October 6, 2023, the Chicago City Council voted to eliminate the subminimum wage for tipped employees working within Chicago by July 1, 2028. Previously established under the One Fair Wage ordinance, the subminimum wage will be gradually phased out beginning on July 1, 2024. As of July 1, 2028, employers of covered employees in Chicago will not be able to take a tip credit of any amount. The standard minimum wage rate in effect at that time will apply to all employees, including those in occupations that customarily receive tips. Employees within those occupations will still be entitled to earn and retain their tips.
Ohio: Legalized Recreational Marijuana
Ohio voters approved Issue 2 legalizing recreational marijuana. Effective December 7, 2023, the cultivation, sale, purchase, possession, use, and home growth of recreational marijuana is legal. The law applies to residents aged 21 and older. The existing medical marijuana program remains unchanged. Employers are not required to permit or accommodate an employee’s use, possession, or distribution of marijuana. Employers can also refuse to hire, discharge, discipline, or take any other adverse action against an individual for their use, possession, or distribution of marijuana. Drug testing policies, drug-free workplace policies, and zero-tolerance drug policies can continue to be enforced. Ohio’s Department of Commerce is authorized to issue rules on implementation and enforcement.
Washington: Exempt Pay Increases in 2024
Effective January 1, 2024, the salary threshold for overtime exempt workers is at least $1,302.40 per week or $67,724.80 per year. Exempt computer professionals must be paid at least $56.98 per hour. Note that these increases exceed the minimum requirements under the current proposed FLSA rule.
Disclaimer: This document is designed to provide general information and guidance concerning employment-related issues. It is presented with the understanding that ManagEase is not engaged in rendering any legal opinions. If a legal opinion is needed, please contact the services of your own legal adviser. © 2023 ManagEase
Federal Government Shutdown Averted … For Now
/in HR Alerts /by ManagEaseAPPLIES TO
Federal Government Employees & Federal Contractors
EFFECTIVE
September 30, 2023
QUESTIONS?
Contact HR On-Call
(888) 378-2456
Discussion
On September 30, 2023, the U.S. Senate passed a last-minute continuing resolution that will keep federal agencies open until November 17, 2023. President Biden signed the short-term spending bill just before midnight on September 30, 2023, temporarily averting a government shutdown that would have impacted millions of federal government employees and contractors.
The temporary funding bill allows the government to stay open for 45 days, giving the House and Senate more time to finish their funding legislation negotiations. However, if at the end of that 45-day period Congress has not reached an agreement that would grant the government a longer-term funding solution, the nation will face the threat of another potential government shutdown.
Who is impacted by a government shutdown?
All federal agencies are required to maintain contingency plans in the event of a government shutdown. Many of these contingency plans require reduced or no pay for federal workers, and in some cases, a forced furlough of thousands of government employees. Federal law says that employees who are in “non-essential” roles are prohibited from working during a lapse in government funding. With more than 800,000 government employees designated as “non-essential,” many federal operations may come to a standstill as a result of a potential shutdown.
Alternatively, those federal employees whose absence would endanger life or property, or whose responsibilities derive from the Constitution, are required to continue working, albeit with delayed paychecks or no paychecks during the shutdown period. This would include the almost 2-million United States military personnel who would be required to continue to perform their duties throughout the shutdown.
In past government shutdowns, federal employees have eventually received backpay. However, backpay was not fully guaranteed until 2019. A shutdown this year would be the first time all federal employees are guaranteed backpay ahead of a shutdown period.
Also impacted by a looming shutdown is the expansive group of government contractors who work for outside firms that are hired and funded by government agencies. A shutdown may present similar issues for federal contractors, who may also experience wage payment delays or potential furloughs. Unlike federal employees, government contractors are not guaranteed back pay once the shutdown is over.
What is a furlough?
A furlough is a temporary leave of absence initiated by an employer, typically due to economic hardship or a lack of available work. Employees affected by furloughs are required to take temporary time off, usually without pay. Furloughed employees technically remain employed; however, they may have the opportunity to seek temporary employment elsewhere, subject to any applicable state regulations or corporate policies.
A furlough is distinct from a layoff, which entails the permanent termination of an employee, usually related to economic or business reasons. Notably, furloughs are not used to address employee misconduct, which is a subject addressed by employee discipline or termination.
Are there EEO considerations associated with a furlough?
As always, when making any decisions impacting the terms, conditions, or privileges of an individual’s employment, employers must refrain from any unlawful, discriminatory, or retaliatory action. This requires that, when selecting employees for furlough or a reduction in working hours, employers use consistent and articulable metrics that are evenly applied across their workforce, and which are consistent with the company’s legitimate business interests (e.g., newest hired, department shutdown, etc.). Otherwise, employers may risk exposure for claims of discrimination or retaliation.
What are the wage and hour considerations associated with a furlough?
Under the federal Fair Labor Standards Act (FLSA), exempt employees must be paid the same minimum salary for each pay period in which they perform any amount of work (with limited exceptions). Notably, the FLSA cautions that employers may not make deductions to an exempt employee’s predetermined salary for absences “occasioned by the employer” or caused by “the operating requirements of the business.” Therefore, while an employer may withhold payment for a full week in which the exempt employee does not work at all, the employer cannot reduce an exempt employee’s salary based on a partial week in which the employee did not perform work. Doing so may jeopardize the employee’s exempt status by violating the “salary-basis” requirements.
Additionally, under the FLSA, employers must compensate non-exempt workers for any work actually performed. Because of this, employers should carefully instruct both exempt and non-exempt furloughed employees not to perform any work while on furlough status. This may include a restriction on email access or revocation of company-issued phones to ensure that employees are not performing any type of work-related duties while on furlough.
Before taking any action with respect to wage and hour reductions for exempt or non-exempt employees during a furlough, employers are encouraged to speak with legal counsel about proper compliance with applicable federal, state and local wage and hour laws.
Does a furlough require notice under the WARN Act?
The federal Worker Adjustment and Retraining Notification (WARN) Act took effect in 1989 to protect workers, their families, and communities by ensuring workers receive advance notice about qualified plant closings and mass layoffs. Notably, the WARN Act requires an “employment loss,” which is defined as: (1) an employment termination; (2) a layoff exceeding six months; or (3) a reduction in an employee’s hours of work of more than 50 percent in each month of a six-month period.
That said, federal, state, and local government entities that provide public services are not covered by the WARN Act, and therefore, federal employees furloughed due to an impending government shutdown would not be entitled to the advance notice requirements. On the other hand, government contractors may be subject to the WARN Act’s requirements, depending on the circumstances of the furlough.
Traditionally, the WARN Act’s notice requirements do not apply to furloughs if the employer communicates that the furlough is temporary and that employees can expect to return to work within six months. Because an anticipated government shut down is unlikely to exceed six months, the WARN Act is unlikely to be triggered for most government contractors. However, if circumstances change and a temporary furlough extends beyond six months or becomes a permanent layoff, then the WARN Act’s notice obligations may be triggered.
Despite the WARN Act’s seemingly straightforward application, the U.S. Department of Labor (DOL) issued a guidance letter in 2012 urging government contractors not to issue WARN notices when facing the increased possibility of sequestration. The DOL’s rationale that government contractors were not entitled to the WARN Act’s notice requirements was premised on the fact that contractors did not know specifically who was going to be laid off, and further, whether they would even be affected by the sequestration. Because of this, the DOL opined that government contractors did not have the appropriate information to provide proper WARN notices, until such time that specific closings or mass layoffs became “reasonably foreseeable.” The DOL could interpret the circumstances surrounding a government shutdown similarly, however, they have not specifically addressed the situation in recent guidance. More significantly, there is no guarantee that a court reviewing the matter would give deference to the DOL’s opinion.
While the DOL is not the entity that enforces the WARN Act, they do provide compliance assistance materials that employers may consult to determine at what time certain notice obligations may be triggered. There may also be state-specific laws that apply (i.e., “mini-WARN laws”) regarding long-term furloughs or permanent reductions in force that impose notice requirements distinct from the WARN Act. Because of these complexities, employers are encouraged to speak with legal counsel to determine their compliance obligations for providing any advance notice to employees ahead of a shutdown period.
Are furloughed workers eligible for unemployment compensation?
Furloughed employees may become eligible for unemployment compensation; however, unemployment compensation requirements will differ by state. Some states may require a one-week waiting period before an individual qualifies for payments, whereas some do not. Additionally, certain states typically require proof that an individual is seeking work to qualify for unemployment compensation, but this requirement may be suspended for furloughed workers impacted by the government shutdown.
Federal employees who qualify for unemployment compensation during furloughs often must return the money after the government reopens and they receive retroactive back pay. Government contractors who receive unemployment compensation, and who do not receive retroactive backpay, may not be required to return the money once they have been restored to their prior positions.
Government employees who are required to continue to work without pay during the furlough are not eligible for unemployment compensation, per the U.S. State Department’s Furloughed Employees Handbook.
Do furloughed workers remain eligible to participate in an employer’s benefits plan?
Health insurance coverage generally continues for federal employees during a shutdown. Agencies continue to process transactions for the Federal Employee Health Benefits (FEHB) program (among others); however, employee premium payments are typically paused during a shutdown. Once the shutdown ends, furloughed employees will begin repaying accumulated FEHB premiums through a payroll withholding.
For furloughed government contractors, the question of benefits eligibility is not as straightforward. Most employer benefits plans set forth certain eligibility requirements, such as a minimum number of working hours required for eligibility in the plan. As a result of a furlough, impacted government contractors will experience a reduction in their working hours, which may cause them to drop below the minimum number of hours required to remain eligible for their employer’s benefits plan. If an impacted employee drops below the required number of hours, employers may need to terminate the employee’s benefits, pursuant to their plan’s documents.
Employers of government contractors should review their plan documents to determine eligibility requirements and speak with their plan administrators about preparations needed to potentially terminate coverage.
Is a furlough a COBRA-qualifying event?
If a reduction in an employee’s hours causes them to lose coverage under the terms of the employer’s COBRA-covered health plan, the employer is required to send out qualifying event notices to impacted employees. Impacted employees and their qualified beneficiaries must be offered the opportunity to continue coverage during the furlough period at their own expense, up to the maximum COBRA continuation period.
Takeaways
While this list is not exhaustive, it illustrates that a government shutdown requires careful consideration of various employment-related issues, including those related to wage and hour, employee benefits, the WARN Act, and anti-discrimination concerns. In the event that a longer-term funding solution is not achieved by the November deadline, employers who expect to be impacted by a potential government shutdown should consult with legal counsel regarding their specific compliance obligations and begin necessary preparations now.
Action Items
Disclaimer: This document is designed to provide general information and guidance concerning employment-related issues. It is presented with the understanding that ManagEase is not engaged in rendering any legal opinions. If a legal opinion is needed, please contact the services of your own legal adviser. © 2023 ManagEase
OSHA: Employee Shooting was Work-Related and Recordable
/in HR Alerts /by ManagEaseAPPLIES TO
All Employers
EFFECTIVE
May 17, 2023
QUESTIONS?
Contact HR On-Call
(888) 378-2456
Discussion
In a previous interpretation letter, the Occupational Safety and Health Administration (OSHA) clarified that an employee’s injury resulting from an act of violence is considered work-related and recordable through a broad approach to determining “work-relatedness” at the time of the injury. Here, the driver of a company vehicle, during working hours and traveling on a public roadway between service calls, neared an intersection where a four-car collision occurred due to a wrong-way driver. The wrong-way driver then shot the company driver and stole their company vehicle, fleeing the scene. There was no evidence the company driver provoked the act of violence in any way.
For purposes of determining whether an event is recordable, an injury is deemed work-related if an event in the work environment either caused or contributed to the injury, subject to limited exception. More specifically, work only needs to be a causal factor to the injury. “Work environment” is defined as “the establishment and other locations where one or more employees are working or are present as a condition of their employment.” A rebuttable “geographic presumption” applies to injuries caused by events that occur in the work environment, and are thus considered work-related. This can include injuries from an event at work that is outside the employer’s control.
In this case, the employee was in a work environment because he was driving a company vehicle and was traveling for work between service calls. Work relatedness requires the employee to be engaged in the interest of the employer as a condition of their employment. OSHA also stated that employers cannot be allowed to exclude random acts of violence from their logs of injuries and illnesses. “The issue is not whether the conditions could have, or should have, been prevented or whether they were controllable, but simply whether they are occupational, i.e., are related to work.” Importantly, recording or reporting a work-related injury, illness, or fatality does not mean that the employer or employee was at fault, that an OSHA rule has been violated, or that the employee is eligible for workers’ compensation or other benefits. Recording a case on the employer’s log only indicates that 1) an injury or illness has occurred; 2) the case is work-related; and 3) the case is non-minor. Applying these factors, OSHA determined the shooting injury was work-related and recordable.
Action Items
Disclaimer: This document is designed to provide general information and guidance concerning employment-related issues. It is presented with the understanding that ManagEase is not engaged in rendering any legal opinions. If a legal opinion is needed, please contact the services of your own legal adviser. © 2023 ManagEase