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U.S. DOL Announces New Payroll Audit Pilot Program

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All FLSA-Covered Employers

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On March 6, 2018, the U.S. Department of Labor (“DOL”) announced a new pilot program: the Payroll Audit Independent Determination (“PAID”) program.  The PAID program’s primary objectives are to expedite resolution of wage and hour claims, improve employer FLSA compliance, and facilitate payment of back wages owed to employees. The PAID program will be administered by the DOL’s Wage and Hour Division (“WHD”) and will be implemented for a trial period of six months.  At the end of the trial period, the WHD will evaluate the effectiveness of the program and determine if modifications are needed. The WHD has not yet announced when the program will start.

All FLSA-covered employers may voluntarily participate in the program, except those who are currently under investigation or engaged in litigation, acting in bad faith, or have committed repeat violations.  The PAID program is intended to help employers self-identify and correct non-compliant federal pay practices, such as misclassification issues, off-the-clock work, and failure to pay minimum wage or overtime. The PAID program may not resolve wage and hour violations of state law. If compensation issues are identified and employees voluntarily agree to resolve and release the specific wage and hour claims, employers must pay 100% of back pay owed, and may avoid liquidated damages, civil monetary damages, attorney’s fees, and other costs associated with litigation.

Employers interested in the PAID program can learn about how the program works and sign up for e-mail updates by visiting the WHD’s webpage.

Action Items

  1. Visit the DOL’s wage page on the PAID program here.
  2. Consult with legal counsel on how the PAID program may affect wage and hour violations.

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.

© 2018 ManagEase

U.S. DOL Adopts “Primary Beneficiary” Test in Determining Status of Unpaid Interns

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January 5, 2018

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On January 5, 2018, the U.S. Department of Labor (“DOL”) issued Field Assistance Bulletin No. 2018-2, adopting the “Primary Beneficiary” test used to determine whether or not unpaid interns should actually be classified as employees under the Fair Labor Standards Act (“FLSA”). Several federal circuit courts have used the primary beneficiary test to determine whether an unpaid intern is in fact an employee, and rejected the DOL’s prior six-factor test as being too rigid.

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Illinois: Responsible Job Creation Act Imposes New Requirements for Staffing Agencies

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June 1, 2018

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The Responsible Job Creation Act (the “Act”) creates new obligations for staff agencies, including the requirement to place temporary workers into permanent positions, new notice requirements regarding work placements, changes to itemized wage statements, and more.  The Act amends the Day and Temporary Labor Services Act and includes the following provisions:

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Ninth Circuit: DOL’s 80/20 Tip Credit Rule is Invalid

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All Employers of AK, AZ, CA, GA, HI, ID, MT, NV, OR, WA Employees

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September 6, 2017

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The Department of Labor (“DOL”) permits employers to give a tip credit to tipped employees who spend no more than 20% of their time performing non-tipped duties. In Marsh v. J. Alexander’s, LLC, the Ninth Circuit noted that this rule is only found in the Field Operations Handbook used by the DOL as guidance for investigations by field officers, rather than in a statute or regulation; as a result, the court stated it was not valid.

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October Updates

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This Short List addresses the following topics:
  1. U.S Federal Contractor Updates
  2. Alabama: City of Birmingham Approves Nondiscrimination Ordinance
  3. California: Cal/OSHA Says Federal OSHA Reporting Requirements do not Apply to CA Employers
  4. Illinois: Amendments to the Illinois Human Rights Act Codify Religious Garb Protections
  5. Kentucky: Supreme Court Permits Wage and Hour Class Actions
  6. New York: 24-Hour Non-Residential Home Care Attendants Must be Paid for Sleep and Meal Periods
  7. Texas: New Leave Protection for Foster Parents and Preference for Veterans in Employment
  8. Wisconsin: Court of Appeals Upholds “Right to Work” Law

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U.S. DOL Announces Intent to Repeal Rule Restricting an Employer’s Use of Tips Where No Tip Credit is Taken

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July 20, 2017

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On July 20, 2017, the Wage and Hour Division (“WHD”) of the U.S. Department of Labor (“DOL”) announced its intention to repeal a 2011 rule stating that customer tips are always the property of an employee, regardless of whether or not the employer takes a tip credit, and that employers were prohibited from using tip pooling to subsidize the hourly wages of untipped employees. Further, a DOL spokesperson reportedly told Bloomberg BNA that DOL investigators are forbidden from enforcing the 2011 regulation ahead of the proposed rule.  Once the rule is rescinded, employers who do not apply a tip credit against a tipped employees’ wages will be able to keep or distribute gratuities in any way the employer sees fit.

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Tenth Circuit: Employers Who Take Tip Credits May Keep Customer Gratuities

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All Employers with CO, KA, NM, OK, UT, and WY Employees

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July 3, 2017

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In Marlow v. New Food Guy, the Tenth Circuit stated that employers of tipped employees may keep customer gratuities, as long as the employee is already paid the required minimum wage.  An employer’s retention of tips under this circumstance does not violate the tip credit provision of the Fair Labor Standards Act (“FLSA”).

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Judge Blocks White Collar Overtime Exemption Rule from Taking Effect Nationwide

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November 22, 2016

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Since the U.S. Department of Labor issued the finalized White Collar Overtime Exemption Rule (the “Rule”) in May this year, employers across the country have been preparing to comply with the Rule’s requirement for white collar employees to earn $47,476 annually in order to maintain exemption status rather than being paid overtime.  In an eleventh hour ruling, just days before its effective date of December 1st, a Texas federal judge ordered a preliminary injunction on the Rule, preventing the Rule from going into effect nationally on its slated December 1st start date.  The Rule was expected to result in millions of workers either (a) being re-classified as non-exempt, and therefore entitled to wage and hour protections, including overtime pay; or (b) receiving dramatic salary increases to keep workers classified as exempt.

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