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Joint Employer, Overtime, and FMLA Changes on the Horizon

overtime pay rules

The U.S. Department of Labor this week announced a Final Rule that makes 1.3 million workers newly eligible for overtime pay. It’s a signal that although Eugene Scalia, President Trump’s official nomination for U.S. Secretary of Labor, is weeks—if not months—away from being approved by Congress, the DOL hasn’t slowed down on reworking Obama-era employment laws.

Patrick Pizzella, who was the previous labor deputy secretary, became acting secretary on July 20, 2019, after Alexander Acosta stepped down. Pizzella is wasting no time moving forward with reversing Obama-administration regulations, despite the temporary nature of his position.

“The DOL will proceed with normal business, including finalizing rules with vigor under the acting secretary’s leadership,” Michael Lotito, an attorney with Littler in San Francisco, told SHRM. “He is committed to getting key rules finalized by the end of 2019, and I believe he will do so.”

Here’s what you should know:

About Overtime Exemption Changes

The DOL’s final overtime rule submitted on September 24, 2019:

  • Raises the “standard salary level” from the currently enforced level of $455 per week to $684 per week (equivalent to $35,568 per year for a full-year worker).
  • Raises the total annual compensation requirement for “highly compensated employees” from the currently enforced level of $100,000 per year to $107,432 per year.
  • Allows employers to use nondiscretionary bonuses and incentive payments (including commissions) paid at least annually to satisfy up to 10% of the standard salary level, in recognition of evolving pay practices.
  • Revises the special salary levels for workers in U.S. territories and the motion picture industry.

The Final Rule is set to take effect on January 1, 2020, leaving employers scrambling once again. Reviewing employees whose salaries fall close to the cutoff threshold is imperative, but you also might want to consider reviewing job descriptions to ensure they still satisfy exemption criteria.

However, be on the lookout for new litigation regarding the updated salary threshold.

“This Final Rule may still be challenged by business groups on the same basis that the Obama-era overtime salary test was blocked,” indicates Amy Beckstead, partner at Beckstead Terry PLLC.

About the Joint-Employer Rule

The DOL is currently reviewing comments on its latest proposed ruling on joint employment, which is consistent with what the National Labor Relations Board (NLRB) introduced earlier this year. It includes a new “four-factor balancing test” to assess whether an alleged joint employer:

  1. Hires or fires the employee in question.
  2. Supervises and controls the employee’s work schedule or conditions of employment.
  3. Determines the employee’s rate and method of payment.
  4. Maintains the employee’s employment records.

Other factors, according to the proposal, may be relevant if the initial four show the alleged joint employer either exercises significant control over the terms and conditions of the employee’s work or otherwise acts directly or indirectly in the interest of the employer in relation to the employee. It also clarifies roles for franchisees, apprenticeship program administrators, and others.

A fact sheet has been released to offer examples of how the new ruling may be applied. Whether or not it’ll make it through final review before the New Year is anyone’s guess.

About Family Medical Leave Act (FMLA) Changes

In other big news, the DOL is planning to start the process of updating FMLA to 1) better protect workers and 2) reduce employers’ FMLA compliance and administrative burdens.

Can you imagine the task of granting FMLA absences becoming decidedly easier? The gathering of opinions and information isn’t scheduled to start until April 2020, but you might want to take that much time to collect your thoughts on what could improve the administrative side of FMLA.

 “More workable rules regarding intermittent FMLA usage, in particular, would be a welcome change for employers,” according to Beckstead.

“This is a unique opportunity – a pre-regulatory invitation to provide input on possible regulatory changes,” exalts Megan G. Holstein, Esq., SVP Absence and Claims Product at Fineos, a software solution for the life, accident, and health industry. “Having worked in this industry for quite some time, I don’t foresee a total overhaul of the regulations, but I am cautiously optimistic about the DOL’s willingness to consider improvements to this complex law.”

Keep an eye out for the DOL to release its formal Request for Information (RFI) in 2020. You can read the initial notice here.

In the meantime, comments are being collected until October 4, 2019, concerning proposed revisions of several optional-use FMLA forms. Revisions of the forms, which are listed here, are meant to “improve customer service, increase compliance, and reduce burden on the public” by incorporating what the department calls “plain language.” The changes also introduce checkboxes instead of unstructured data fields where appropriate, add color-coding to alert the employer/employee/health care provider which fields are available for their completion, increase font size for readability, and expand instructions. The DOL hopes that the revisions will “reduce the number of forms returned for additional information because they are considered incomplete or contain insufficient information.”

Change is never fun, whether it works in your favor or not. Consult your business attorney now about the potential DOL law changes that may affect your employees in the coming year. Some may occur quickly and could catch you off-guard otherwise.

Questions about how these rules may affect temporary or contract workers? Feel free to contact us.