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This HR Alert addresses the following topics:
- OSHA 300A forms, due February 1, 2016;
- The U.S. Dept. of Labor’s issuance of guidance on joint employer analysis;
- Long Beach, California’s minimum wage rate increase
- Federal unemployment insurance rate increase
REMINDER – OSHA 300A Forms DUE by February 1, 2016
The Occupational Safety and Health Administration (“OSHA”) requires covered employers (https://www.osha.gov/recordkeeping/) to post their OSHA 300 Log of Work-Related Injuries and Illnesses (OSHA Form 300A) for the previous year, between February 1st and April 30th each year, regardless of whether or not any incidents actually occurred. Form 300A must be certified by a company executive and posted in a conspicuous location where notices to employees are customarily posted.
- Audit and complete OSHA 300 Log.
- Ensure OSHA 300A form is properly prepared and timely posted.
U.S. Dept. of Labor Drills Down on Joint Employer Status
The Dept. of Labor (“DOL”) recently issued an Administrative Interpretation (“AI”) providing guidance on the issue of joint employment under the Fair Labor Standards Act (“FLSA”) and the Migrant and Seasonal Agricultural Workers Protection Act (“MPSA”). The significance of a joint employer relationship is that each employer is jointly and severally responsible for compliance with FMLA and/or MPSA for the employee’s entire employment by all applicable employers (e.g., calculating overtime or payment of the entire amount of wages due). This AI is similar to, but separate from the National Labor Relations Board Browning Ferris ruling on joint employer status in August 2015, and the DOL notes that the tests for joint employment under the FLSA and MPSA are different than those used under other labor statutes, such as the National Labor Relations Act and the Occupational Safety and Health Act.
The DOL identified two types of joint employment: horizontal and vertical. The FLSA and MPSA each have existing regulations for determining joint employer status – the FLSA for horizontal joint employment, and the MPSA for vertical joint employment. The DOL stated that the regulations are “useful guidance” for each law and will be applying the FLSA horizontal analysis in MPSA cases, and the MPSA vertical analysis in FLSA cases. These types of joint employment are not mutually exclusive, and both may be present depending on the circumstances.
Horizontal joint employment occurs when (1) an employee has employment relationships with two or more employers, and (2) the employers are sufficiently associated or related with respect to the employee such that they jointly employ the employee. For example, when an employee works for two or more restaurants operated by the same entity, or when two employers have an agreement to share labor forces. The DOL admits that horizontal joint employment does not exist if the employers are acting entirely independently of each other and are completely disassociated with respect to an employee who works for both of them. The focus of this analysis is the relationship between the two (or more) employers, including, but not limited to, the following factors:
- Who owns the potential joint employers (i.e., does one employer own part or all of the other or do they have any common owners)?
- Do the potential joint employers have any overlapping officers, directors, executives, or managers?
- Do the potential joint employers share control over operations (e.g., hiring, firing, payroll, advertising, overhead costs)?
- Are the potential joint employers’ operations inter-mingled (e.g., is there one administrative operation for both employers, or does the same person schedule and pay the employees regardless of which employer they work for)?
- Does one potential joint employer supervise the work of the other?
- Do the potential joint employers share supervisory authority for the employee?
- Do the potential joint employers treat the employees as a pool of employees available to both of them?
- Do the potential joint employers share clients or customers?
- Are there any agreements between the potential joint employers?
Vertical joint employment occurs when (1) the employee has an employment relationship with one employer, and (2) the economic realities show that the employee is economically dependent on another entity involved in the work. For example, this may occur in a staffing agency, subcontractor, labor provider, or other “intermediary employer” relationship. The analysis focuses on whether the employee of an intermediary employer is also employed by another employer.
First, one must determine whether the intermediary employer is an employee of the potential joint employer before proceeding with the vertical joint employment analysis. If the intermediary employer is an employee of the potential joint employer, then all of the intermediary employer’s employees are employees of the potential joint employer also, and there is no need to conduct a vertical joint employment analysis. This situation would arise where the intermediary employer was not an independent contractor, but was actually an employee, which would be determined using an independent contractor analysis.
Second, if the intermediary employer is not an employee of the potential joint employer, then an economic realities test should be applied. The DOL notes that courts apply the economic realities test differently depending on jurisdiction, but states the MPSA’s seven factors provide useful guidance on this topic, including:
- To what extent does the potential joint employer direct, control, or supervise the work performed?
- Does the potential joint employer have the power to control employment conditions of the employee?
- What is the permanency and duration of the relationship between the employee and the potential joint employer?
- Is the employee’s work for the potential joint employer repetitive and rote?
- Is the employee’s work an integral part of the potential joint employer’s business?
- Does the employee perform the work on premises owned or controlled by the potential joint employer?
- Does the potential joint employer perform administrative functions for the employee (e.g., providing worker’s comp insurance, safety equipment, housing, transportation, tools and materials, and processing payroll)?
Finally, the DOL admonished courts that apply a control test for determining joint employer status, stating that the control test approach is not consistent with the breadth of employment under the FLSA.
- Review the DOL ruling here.
- Review your contracts and subcontractors’ working arrangements with an attorney to evaluate any potential liability exposure.
Long Beach Approves Minimum Wage Increase
The Long Beach City Council voted to gradually raise the minimum wage from $10 to $13 by 2019, with increases to $10.50 as of January 1, 2017, $12 in 2018, and $13 by 2019. The Council also commissioned a study to assess the impacts of the new minimum wage amounts on the economy. Depending on the results of the study, Long Beach’s minimum wage would rise to $14 in 2020 and to $15 in 2021. Note that nonprofits and small businesses with 25 employees or less have a one-year delay on each of the scheduled increases. From 2023 on, minimum wage increases would be indexed to inflation within the Greater Los Angeles Area.
The Council also approved an amendment letting employers pay a training wage worth 85% of the minimum wage to interns for the first 480 hours, or six months, of those individuals’ employment. The City Attorney will now be responsible for writing the ordinance reflecting these changes, and was instructed to base the ordinance on the similar one Los Angeles passed last summer.
- Review current pay rates and 2017 budget impact of wage increases.
- Contact ManagEase for a California Fair Pay Act compensation audit to identify gender wage disparities.
Increase in Federal Unemployment Insurance Taxes on Employers
The federal tax on employers is increasing $21 per employee, per year. Because California is in debt to the Federal Unemployment Trust Account (“FUTA”), California employers must pay a higher tax until the debt is eliminated. The federal unemployment insurance maximum tax for 2015 is $147 per employee, and in 2016 is projected to be $168 per employee. FUTA taxes are due January 31st of the year following the year in which the taxes are applied. The federal unemployment insurance tax is in addition to the state unemployment insurance tax.
- Timely pay any FUTA liability by January 31, 2016.
- Plan for increased unemployment insurance taxes due in 2017 for the 2016 calendar year.