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DOL Proposes New Rules for Tipped Employees
By: Forrest Rhodes

If your business has employees who receive tips, you need to know about the Department of Labor’s (DOL) proposed changes to its tip regulations.

As background, the Fair Labor Standards Act (FLSA) generally requires covered employers to pay employees at least the federal minimum wage, which is currently $7.25 per hour. However, the FLSA allows employers to pay tipped employees as little as $2.13 per hour and apply their tips as a credit toward satisfying the full minimum wage (the “tip credit”).

In 2018, the FLSA was amended to provide that an employer “may not keep tips received by its employees for any purposes, including allowing managers or supervisors to keep any portion of employees’ tips, regardless of whether or not the employer takes a tip credit.” The 2018 amendment also rescinded DOL regulations that prohibited employers from requiring tipped employees (such as servers and bartenders) to share their tips with traditionally non-tipped employees (such as cooks and dishwashers), even when the employer does not take a tip credit.

The proposed new regulations would further implement and clarify these 2018 statutory changes. The main provisions are as follows:

  • Employers, managers, and supervisors are prohibited from keeping employee tips (including participating in tip pools) under any circumstances.
  • If the employer pays all employees at least the full federal minimum wage (meaning the employer is not taking a tip credit), then the employer can establish required tip pools between all workers, including customarily and      Continue Reading...
A Kansas Employers’ Guide to the New Year
By: Travis Hanson

The start of the new year is a perfect time for Kansas employers to address employment updates from 2018 and prepare for possible changes coming in 2019. In this article, we’ve summarized a few changes and trends from 2018, as well as a few changes we might see in 2019.

EEOC & Title VII Litigation Trends. 2018 saw another increase in harassment and discrimination lawsuits being filed nationwide. In fact, EEOC litigation filings have doubled since 2016. One big area of movement is sexual harassment cases and charges, which rose significantly in 2018 after more than five years of decreasing numbers. We expect this trend will continue into 2019.
Another trend is the EEOC’s sustained efforts to push for inclusion of sexual orientation and gender identity as protected classes under Title VII, which prohibits discrimination, “because of sex.” The Supreme Court has long held that Title VII protects against discrimination for employees who don’t meet typical “gender norms,” such as a woman who is not feminine enough, but it has not yet addressed head-on the questions of sexual orientation or gender identity.
Over the last few years, the EEOC has taken a clear position that “sexual orientation is inherently a ‘sex-based consideration’ and an allegation of discrimination based on sexual orientation is necessarily an allegation of sexual discrimination under Title VII.” Currently,      Continue Reading...
FLSA 80 Years Old and Still Kicking
By: Boyd Byers

Eighty years ago today, President Franklin Delano Roosevelt signed the Fair Labor Standards Act (FLSA) into law. The New Deal legislation established minimum wage, overtime pay, recordkeeping, and child labor standards. In response to criticism that the law would overregulate private business, President Roosevelt stated during a “fireside chat” the night before the signing, "Do not let any calamity-howling executive with an income of $1,000 a day, ... tell you ... that a wage of $11 a week is going to have a disastrous effect on all American industry."

Other happenings in the summer of 1938? Joe Louis knocked out Max Schmeling in their rematch to retain his title, the first Superman comic book was issued, and Lou Gehrig retired from baseball and gave his “Luckiest Man on the Face of the Earth” speech. 
The 80 years since then have seen radical changes in technology and the workplace. But, the core principles of the FLSA—a mandatory minimum wage, and premium pay for overtime pay to nonexempt workers—remain in place.
Despite its long history, the FLSA did not become a hotbed for employment lawsuits until a decade ago. Today, lawyers representing employees are eager to bring FLSA claims for a variety of reasons:
  • The law is technical, and even employers with the best intentions can inadvertently violate its requirements.
  • It’s much easier to show a failure to comply with minimum wage or overtime pay requirements than it is to prove discrimination or retaliation.
  • Violations often      Continue Reading...
An Employee by Any Other Name: Nail Technicians Misclassified a Independent Contractors
By: Travis Hanson

Recently, the Kansas Court of Appeals affirmed the district court and the Kansas Department of Labor’s (KDOL) finding that nail technicians at a salon were employees rather than independent contractors for unemployment-tax contribution purposes. This case has important tips for handling classification issues in any industry.

Review of the Record
In 2014, Leander and Hongmin (Amy) Fisher began doing business as Amy’s Spa Services, LLC (the Spa). The Spa classified all of its nail technicians as independent contractors. The KDOL audited the business to determine whether the Spa properly classified the technicians for unemployment-tax withholdings. For unemployment-tax contributions in Kansas, an individual is an employee if the employer has the right to control the manner and means of the work performed; whether the employer exercises that right is inconsequential.
The auditor reviewed the Spa’s independent contractor agreement, interviewed three nail technicians and Leander Fisher, and reviewed some of the Spa’s financial documents. The auditor’s review of the independent contractor agreement stated that the parties intended to form an independent contractor relationship. Under the agreement, the Spa purported to require the technicians to clean their workstations, supply the tools necessary to complete their jobs, and gave the technicians discretion to set their own prices, as long as they did not undermine the Spa’s prices. The agreement also provided that the Spa would receive all payments that were later distributed to the technicians, and that      Continue Reading...
Christmas Vacation, Free Beer, and the FLSA
By: Boyd Byers

In the holiday classic National Lampoon's Christmas Vacation, family patriarch Clark Griswold is distressed because he has not yet received his Christmas bonus, which he is counting on to cover a check he wrote for a new swimming pool. Finally, on Christmas Eve, a courier arrives with a delivery. As his family looks on, Clark opens the envelope to find a one-year membership to the Jelly of the Month Club, not the bonus he is expecting.

Naturally, Clark has an epic meltdown. Well-meaning but misguided Cousin Eddie then kidnaps Clark's boss and drags him to the family's home so Clark can confront him about canceling employees' bonuses: “I was expecting a check. Instead, I got enrolled in a jelly club. Seventeen years with the company. I've gotten a Christmas bonus every year but this one. You don't want to give bonuses, fine. But when people count on them as part of their salary--well, what you did just plain . . .”
“Sucks,” Clark's son, Rusty, interrupts.
After looking around at the family, the boss has a change of heart and announces that he is reinstating the bonuses. And it's Merry Christmas to all and to all a good night--until a SWAT team breaks into the family's home to rescue the boss and Uncle Lewis inadvertently triggers a sewer gas explosion.
Promises, promises
Although canceling employee bonuses is a great setup for a comedy, year-end bonuses can lead to legal snags that are no laughing matter for employers. Under Kansas wage payment laws and general principles      Continue Reading...
Federal Court Puts DOL Salary Changes on Ice
By: Forrest Rhodes

Late yesterday afternoon, a federal judge in Texas issued an order preliminarily enjoining the DOL's proposed amendments to the white-collar exemptions under the FLSA.  The most notable aspect of these proposed changes was the substantial increase in the minimum salary necessary for exempt status, from the current $23,660 to $47,476 per year. 

This decision arose from two recently filed cases brought against the Department of Labor by a group of state Attorneys General and a coalition of business advocacy groups.  Although the court did not issue a final decision on the merits of the issues, it determined that it was substantially likely that the plaintiffs would prevail on their argument that the DOL lacked the authority to impose a salary requirement that could be determinative of exempt status, regardless of an employee's job duties or responsibilities.

The injunction does not end the litigation in those cases, but it effectively places the regulatory amendments on indefinite hold until those cases conclude through final decisions.  While it's possible that the court could ultimately decide to lift the injunction, or the district court's decision could be reversed on appeal, neither of those decision points is likely to occur in the near term, or before the Trump Administration takes over the DOL.  How and to what extent the Trump DOL decides to continue to fight for these amendments remains to be seen. 

For now, employers should continue to follow the current requirements for exempt status, which are paying a salary of at least $455 per week per the current salary      Continue Reading...

Potential Legal Challenge to the New DOL Overtime Regulations
By: Donald Berner

Just a heads up to those of you working hard to plan for the change in the overtime regulations set to take effect on December 1.  It appears that the U.S. Chamber of Commerce plans to file a lawsuit seeking to enjoin the new rule and ultimately seeking to invalidate the regulation.  While nothing has been officially announced, the McKinney Texas Chamber of Commerce issued an announcement that it was joining a coalition supporting the lawsuit which seems to indicate something is about to happen on this front.  Stay tuned to this issue as those upcoming changes you are planning to make may not be necessary if the litigation succeeds. 

DOL Overtime Regulations Update
By: Donald Berner

The timing of the issuance of DOL's new overtime rule has been a matter of much projection and debate.  Prior to last week, the estimated arrival date for the final rule was summer of 2016.  Last week, the Secretary of Labor expressed his desire to ensure the rule is issued in the early spring of 2016.  Considering the potential for Congressional action and other litigation, the early spring 2016 date makes sense.  A key concern for worker advocate groups is to ensure the rule is published early enough that any Congressional action takes place while President Obama is still in office.  An early spring release meets this key goal.  So for employers working on contingency planning for the new rule, you might move your completion date up a bit if you expected this to be a summer/fall of 2016 activity. 

Congress Repeals ACA's Auto-Enrollment Requirement
By: Jason Lacey

Need something to add to your list of things to be thankful for this year?

As part of the Bipartisan Budget Act of 2015, Congress has repealed the auto-enrollment requirement under Section 18A of the Fair Labor Standards Act (FLSA), which was added by the Affordable Care Act. This provision would have required an employer that has more than 200 full-time employees to automatically enroll any new full-time employee in one of the employer's health plans, unless the employee affirmatively opted out of coverage.

Implementation of this requirement had been indefinitely delayed, pending the issuance of interpretive guidance. As such, employers will not feel any immediate impact from this legislation. But the auto-enrollment requirement raised a number of sticky issues that were likely to present challenges, so the repeal is a welcome development for regulation-weary employers.


DOL Continues to Add States to Employee Misclassification Initiative
By: Donald Berner

With the addition of Wisconsin last week, the Department of Labor (DOL) now has 19 states participating in the collaborative effort to reduce the misclassification of employees as contractors.  The DOL's initiative is a concerted effort to investigate and pursue companies that misclassify employees as contractors to avoid various tax and/or benefit burdens.  Over the last three to four years, the initiative has resulted in a significant number of companies being investigated by the DOL (or a state partner) and the payment of significant back pay amounts to employees.  If your company makes use of independent contractors (contract labor), you should carefully review these arrangements to ensure they are truly contractors and not employees.  Correcting these issues before a government investigation is almost certain to be better for your company.  

Court Invalidates DOL Change to Companionship Exemption
By: Donald Berner

Last week a federal judge invalidated the Department of Labor's (DOL) proposed change to the companionship exemption under the Fair Labor Standards Act.  The change in the rule was expected to cause the majority of home health workers to no longer be exempt and thus subject to the minimum wage and overtime rules.  At issue was how the DOL defined companionship in the rule.  The primary change at issue was eliminating the exemption for those home health care workers that spend more than 20% of their time on personal care related tasks.  These tasks include things like bathing, dressing, cooking, shopping, cleaning, etc.  In most cases, these tasks are a significant portion of what home health care workers do to assist their clients.  It is now in the DOL's court to decide whether to appeal the decision.  Stay tuned.

Gaga Case Goes Bye-Bye
By: Boyd Byers

Kansas Employment Law Blog's action news team brings you the hard-hitting stories and latest news from the world of employment law. Consistent with that mission, it is our duty to report that yesterday Lady Gaga has reached an out-of-court settlement with her former personal assistant, who claimed the pop diva owed her nearly $400,000 in unpaid overtime under the FLSA for work performed over a 13-month period.

We've been following the case for nearly a year. (Gaga over the FLSA Monster (01/27/2013); Court Not Goo-Goo over Gaga--the FLSA Monster Revisited (10/03/2013).) Jennifer O'Neill, Gaga's (now former) friend, served as her personal assistant during a world tour. O'Neil alleged she was paid a base annual salary of $75,000, but was cheated out of thousands of hours of overtime while she was on call 24/7 to attend to Gaga's every need. Last month the court ruled that O'Neill had enough evidence to take her FLSA claims to trial, where a jury would need to decide whether her on-call time was compensable. But rather than endure a trial, which was scheduled to start on November 4, Gaga decided to open up her purse and settle the case. The amount of the settlement was confidential. But whatever she has to pony up, Gaga should be able to cover it--she earned $80 million in the first six months of 2013, according to Forbes

In our original article about the case (link above), we identified seven lessons HR professionals can learn from this case. Here are four more takeaways: 

(1) Overtime wages can rack up quickly when you mistakenly treat an employee as exempt from the FLSA. So make sure any employees who are treated as salaried exempt, and thus not      Continue Reading...

Court Not Goo-Goo over Gaga—the FLSA Monster Revisited
By: Boyd Byers

Earlier this year we reported on a lawsuit against pop diva Lady Gaga by a former personal assistant for unpaid overtime. (See Gaga over the FLSA Monster.) For those of you waiting on the edge of your seat to see how the case turned out, here's an update.

If you're late to the party, here's the back story. Stefani Germanotta (aka “Lady Gaga”) hired Jennifer O’Neil, a friend, as her assistant. O’Neil was told that she would receive $75,000 as an annual salary, but nothing was said about overtime. Things went bad, O’Neil was fired, and she now claims Gaga failed to pay her overtime wages when she was “working and/or on call every hour of every day” while on tour with Gaga.

O’Neil had various responsibilities, such as cleaning Gaga’s hotel room, ensuring Gaga was “hopefully” on time to places, making sure Gaga ate and drank when she needed, and handling Gaga’s extensive luggage—generally twenty bags. According to O’Neil, Gaga would wake her during the night to take out a DVD and replace it with another because Gaga was tired of the movie she was watching.
In September, a New York court denied Gaga's motion to dismiss O’Neil’s FLSA claim for unpaid wages for on-call time. The court explained that “on-call time can constitute work and is compensable under the FLSA where the employer restricts an employee’s ability to use the time freely for his or her own benefit.” This includes periods of inactivity that are unpredictable and usually of short duration, as the      Continue Reading...
Unpaid Interns Can Bring Big Headaches
By: Donald Berner

With the summer coming to a close and the school year about to resume, it's a good time to issue a reminder about the perils of using interns.  This particular topic continues to be a hot one as class action claims continue to be filed on behalf of groups of interns at various companies.  For a quick refresher on interns click here and read our blog post from earlier this year.



The Perils of Interns Under the FLSA
By: Donald Berner

While it may not seem like it with the current weather patterns shifting back and forth from mild to cold, including a little snow, the summer season is just around the corner. And with that comes the arrival to the workforce of students looking for a bit of solid experience between school years. Sometimes this experience is paid work and sometimes it is not.  For those employers considering the unpaid internship approach, beware. Simply calling someone an intern and putting them to work for free isn't necessarily the right approach and may lead to a bill coming due later for unpaid wages.

The DOL has a six-factor test for making determinations about whether an internship meets the exclusion and can be unpaid. Those factors include:

  1. Is the training similar to the training the individual would get in an educational atmosphere;
  2. Is the experience for the benefit of the intern;
  3. Does the intern replace a regular employee and work under close supervision;
  4. Does the employer gain any immediate advantage from the training program;
  5. Is the intern entitled to a job at the end of the internship; and
  6. The employer and intern understand the intern will be unpaid.

If the employer can sufficiently meet all the factors listed above, then the intern can be unpaid. Employers should keep in mind, however, that this exclusion is very narrowly interpreted. For an intern to be truly unpaid, it almost needs      Continue Reading...

Gaga over the FLSA Monster
By: Boyd Byers

Pop diva Lady Gaga affectionately refers to her fans as “little monsters.” But she recently became acquainted with a big monster—the Fair Labor Standards Act. 

Jennifer O’Neill, who worked as Gaga’s personal assistant, sued Gaga’s company, Mermaid Touring, Inc., for FLSA violations. She says she was continuously on the clock to attend to Gaga’s needs, at her beck and call, both at home and while traveling on tour. According to O’Neill’s math, during 56 weeks of employment she worked over 7,000 hours of uncompensated overtime, for which she is owed nearly $400,000 in back pay, an equal amount in liquidated damages, and the obligatory attorneys’ fees and costs.
Born this Way?
Gaga testified for six hours in the case. Excerpts from her deposition transcript were recently reported in the New York Post. Here are some highlights.
Gaga said that O’Neill “knew exactly what she was getting into, and she knew there was no overtime.” When grilled by O’Neill’s lawyer, Gaga admitted that her decision to not pay overtime wasn’t based on the law, but was “actually based on a bubbly, good heart.”
She also testified that O’Neill was “majorly unqualified” for the job, which was “essentially a favor.” And it was filled with perks: “she slept in Egyptian cotton sheets every night, in five-star hotels, on private planes, eating caviar, partying . . . all night, wearing my clothes . . .      Continue Reading...
Fair Labor Standards Act Pitfalls Abound
By: Donald Berner

A news release yesterday from the Department of Labor (DOL) announcing the recovery of over a million dollars for a group of approximately 400 bank employees highlights the types of routine risks the FLSA creates for employers.

In the reported case, the employees were improperly classified as exempt employees. As a result, the employer was required to provide back pay for overtime hours worked by the group. Adding insult to injury, the press release noted the DOL collected additional overtime as a result of bonus payments made to the employees improperly classified as exempt. Once the employees were no longer exempt, the bonus payments were required to be added into the employees total compensation in order to calculate the effective hourly rate for purposes of overtime payment. 

This press release should serve as a reminder to employers to pay close attention to the classification of employees as exempt or non-exempt. A group of improperly classified employees can be a ticking time bomb within the workplace since the statute of limitations period for a FLSA claim can be as long as three years. To read the press release click here.

DOL Creates 100-Year Anniversary Video
By: Boyd Byers

In honor of America's centennial, France gave us a gift: the Statue of Liberty. In recognition of its own centennial, the United States Department of Labor has given all of you a gift: a YouTube video chronicling its history. The six-minute-long video describes DOL's creation, introduces the labor secretaries, summarizes its legislative history, and promotes the things it does for workers. But be forewarned: the video is a slide slow, not a live-action film, and DOL tells the story to serve its own interests.  Watch the Video

Wage-and-Hour Lawsuits on the Rise

Federal wage-and-hour lawsuits have been increasing steadily over the past decade. The number of cases has gone up almost every year since 2000.  Nationally, the number of cases filed in 2011 is over 380% higher than the number filed in 2000. The trend is similar in Kansas, with a nearly 350% increase in cases filed in 2011 compared to 2001. 

Why? The poor job market is at least partly to blame. When employees get laid off and cannot find other work, they are more likely to look for ways to get money out of their former employer. In addition, several high-profile cases and aggressive Internet marketing by lawyers have made workers more aware of their rights under wage-and-hour law. These cases are attractive to lawyers who represent employees for several reasons: there is no requirement to prove intent or unlawful motive--either the employer followed the technical requirements of the law or it didn't; they are relatively easy to bring as group actions on behalf of all similarly situated employees; and the law provides for recovery of attorneys' fees if the employee prevails. 

The Wichita Eagle ran a feature story about the increase in wage-and-hour claims in its Sunday Business section. Kansas Employment Law Blog author Boyd Byers, who was quoted in the story, explained that most wage-and-hour cases fit in one of three categories:

  • "Misclassification" cases, where the issue is whether the employer misclassified non-exempt employees as being exempt from the law's overtime requirements;
  • "Off-the-clock" cases, in which employees allege they were not properly paid for all of their time spent      Continue Reading...
Do You Know? Wage and Benefit Notification
By: Boyd Byers

Regular readers of this blog may have noticed that there has not been a lot of Kansas-specific content lately. No, we haven't forgotten that this is the Kansas Employment Law Blog. But when the legislature is not in session, and the Kansas Supreme Court and Kansas Court of Appeals are not cranking out decisions in employment-related cases, there simply are not a lot of state-specific new developments to talk about. And most employment law and employee benefits issues are, by their nature, federal in scope. So we've been feeding you a steady diet of federal law developments, practical advice based on general employment law principles, and my musings on pop culture, statistics, and wacky cases (all with an employment law nexus, however strained). 

To provide more Kansas content, we are starting a new, semi-regular feature called Do You Know? These articles will discuss various contours of Kansas employment law that are often overlooked or misunderstood.  We'll start with the Kansas Wage Payment Act's notification requirements. 

Do you know that upon an employee's request, a Kansas employer must furnish the following information in writing:

  • Rate of pay and date and place of payment;
  • Any changes in rate of pay or date and place of payment prior to the date of such changes;
  • Employment practices and policies regarding vacation pay, sick pay, and any other benefits to which the employee is entitled and that have a direct bearing upon wages payable; and
  • An itemized statement of deductions made from the employee's wages for each pay period deductions are made?

In      Continue Reading...

FLSA Claims Reach Record Levels in 2012
By: Donald Berner

I read an interesting article highlighting the statistics for claims filed under the FLSA over the last twenty years.  This year, FLSA claims reached a record high and we still have four months left in the year.  The statistics show claims for 2011 at 7,006 for the year and this year we are already at 7,064 claims.  By the time the numbers are all in, the claims filed in 2012 will dramatically exceed the numbers historically. 

While employers can't do much to stem the growing number of claims, they can be sure they are complying with the FLSA rules.  For most employers, the key risk areas involve the payment of overtime and proper classification of exempt employees.  Spending a little time this fall to make sure your company is in compliance may be time well spent considering the extra attention being paid to FLSA issues by the Department of Labor and the plaintiff's lawyers.

U.S. Department of Labor Changes Course On Overtime Calculations
By: Donald Berner

In yet another example of White House politics driving the employment ship, the U.S. Department of Labor (DOL) recently rescinded regulations that had been proposed to clarify the fluctuating hours method of calculating overtime.  This method, also known as fixed-pay-for-fluctuating-hours, is a lawful method under the Fair Labor Standards Act of paying non-exempt employees whose hours fluctuate from week-to-week a fixed salary that is meant to be the employee's straight-time wages for all their working time.  When the employee works overtime (i.e. more than 40 hours in a week), the overtime premium is calculated at half-time rates rather than the traditional time-and-a-half.  The regulations proposed under the Bush Administration were intended to clarify that additional forms of compensation, such as production bonuses, commissions, on-call pay, or shift premiums, were permissible under the fluctuating hours method as long as they were included in the employee's regular rate for purposes of overtime calculations. 

Desiring to make the fluctuating hours payment method less attractive for employers, the current administration rescinded the proposed language regarding bonuses and other forms of additional compensation.  The DOL explained its decision by stating that providing an employee with additional forms of compensation was inconsistent with paying the employee a "fixed salary."  The DOL went on to state that, except for overtime premiums, providing any other forms of additional compensation would invalidate the fluctuating hours payment method.  Presumably in that case the DOL would take the position that the employee would be entitled to overtime calculated at the full time-and-a-half.

Although not addressed by the DOL's      Continue Reading...

Federal Appellate Court Finds No Individual Liability under the FLSA
By: Donald Berner

In a recent decision (Gray v. Powers, No. 10-208080 (5th Cir. 2/29/2012)), a federal appellate court determined that an individual's status as an owner of business was not enough by itself to justify individual liability for the business' FLSA violations.  In that case, the plaintiff raised class-wide overtime claims against his former employer, which had gone out of business.  Finding the business' well dry, the plaintiff sought individual liability against one of the members of the limited liability company (LLC) that had run the business.  The court found that the member did not exercise actual operational control over the business.  He did not exercise authority with respect to the hiring or firing of the plaintiff or other employees.  Likewise, he did not exercise control over the employee's work schedules, wages, or other terms and conditions of employment.  Finally, the court found he was not involved in the maintenance of the company's employee records. 

The court's decision is not remarkable by itself, but it highlights the potential for individual liability that exists under the FLSA.  Like corporate shareholders, LLC members are generally protected from personal liability for the actions of the company.  However, when the owner, or any manager for that matter, has an active hand in the management of the business, especially with respect to the wages or working conditions of subordinate employees, individual liability becomes a potential risk.

Child Labor Parental Exemption Gets a Second Look
By: Donald Berner

In the fall of 2011, the U.S. Department of Labor issued a set of proposed regulatory changes impacting the use of child labor in agricultural settings.  (See our blog post of 10/21/2011 for more information.)  Part of those proposed regulations focused on the parental exemption to the child labor rules.  After receiving comments from agricutural industry representatives and getting some Congressional attention, the DOL now intends to re-propose the regulation as it relates to the parental exemption.  One can expect the DOL to take into account the comments received in this upcoming revised proposal.  For further reading click here.

Colorado Latest to Join DOL in Worker Misclassification Efforts
By: Donald Berner

The U.S. Department of Labor (DOL) continues its efforts to combat the misclassification of employees as independent contractors.  Last week, the DOL entered into a partnership agreement with the state of Colorado.  This agreement expands the number of states cooperating with the DOL to eleven, including our neighbors to the east and west (Missouri and Colorado).  Stay tuned as the DOL continues to turn up the heat on independent contractor classification issues.  To keep tabs on the DOL's efforts click here.

Hey Kids, No Texting While Driving the Combine
By: Boyd Byers

Kansas has a strong agricultural tradition.  Kansas farmers lead the nation in wheat production.  Almost 20 percent of all U.S. beef comes from Kansas.  Our state ranks high in many other crop and livestock statistics as well.  Agriculture and agribusiness are crucial to the Kansas economy.  In fact, one in five Kansans work in agriculture-related jobs.

In rural areas, teenagers often work part-time performing agricultural work.  I grew up in a small town, and from the time I was twelve years old until I left for college I spent large parts of my summers in the fields baling hay, detasseling corn, and walking beans for pay.  Some farm operations and other agricultural businesses depend heavily on part-time youth workers.  
Earlier this fall, the U.S. Department of Labor proposed, in its own words, a “dramatic updating” to its child labor regulations directed toward agriculture-related jobs.  The proposed changes include:
·       Preventing youth under 18 years of age from working in grain elevators, grain bins, silos, feed lots, stockyards, livestock exchanges, and livestock auctions, or otherwise being employed in the storing, marketing, and transporting of raw farm products.
·       Prohibiting hired farm workers under age 16 from operating almost all power-driven equipment, except for some “student-learners” under specified conditions.
·       Prohibiting youth from using electronic devices, including communication devices, while operating power-driven equipment. (In other      Continue Reading...
Beware of Black Swans
By: Boyd Byers

Europeans in the Middle Ages came up with the colloquialism “rare as a black swan” to describe impossibility, because they knew good and well that all swans are white.  Then Dutch explorer Willem de Vlamingh discovered black swans in Australia in 1697.  Oops.  After that the term “black swan” was used to describe a perceived impossibility that might later be proved possible.             

Philosopher Nassim Nicholas Taleb expanded on this idea and developed it into a theory, which he described in his 2007 bestselling book, The Black Swan: The Impact of the Highly Improbable.  A black swan, as described by Taleb, is an unexpected, high-impact event that comes as a surprise to the observer, but which the observer rationalizes afterwards as if it could have been expected.  World War I, the Internet, and the September 11 terrorist attacks are classic examples of black swan events, according to Taleb.
Taleb cautions that businesses need to be prepared for black swan events.  He wrote in 2007 that banks and trading firms had exposed themselves to massive losses beyond the predictions of their limited, and thus defective, models.  The events of 2008 seem to have proven him right.  
“Black Swan,” the movie, is a 2010 psychological thriller starring Natalie Portman as a ballet dancer in a production of “Swan Lake.”  The film received critical praise, including several Academy Award nominations, and Portman won the Best Actress Oscar      Continue Reading...
IRS Calls 'Olly Olly Oxen Free' to Employers Who Voluntarily Reclassify Contractors as Employees
By: Boyd Byers

Olly olly oxen free!

Do you remember this chant as the “all clear” signal when playing tag, hide-and-seek, and similar childhood games?  (In case you’re wondering, linguists think the phrase probably evolved from “all ye, all ye, ‘outs’ in free” as it was passed down over generations of schoolchildren.)

On September 21, the Internal Revenue Service announced the Voluntary Classification Settlement Program (VCSP). It’s sort of like an “olly olly oxen free” for employers who have misclassified employees as independent contractors.  Sort of. It’s not entirely free, of course.  But the program does offer employers substantial relief from past federal employment tax liability if they agree to get into compliance going forward. 

The VCSP is available to employers who are currently treating a class or group of workers as independent contractors, but want to treat the workers as employees prospectively.  In exchange for agreeing to treat the workers as employees for future tax periods, employers participating in the VCSP get the following relief: 
  • pay only 10 percent of the employment tax liability that may have been due on compensation paid to the workers for the most recent tax year;
  • no liability for any interest and penalties on the amount; and
  • not subject to an employment tax audit with respect      Continue Reading...
Confucius Says: He Who Retaliates Digs His Own Grave
By: Boyd Byers

The thirst for revenge is among the strongest of human emotions.  In fact, the innate human desire to “get even” has driven much of the history of the world.  But acting on feelings of revenge can have dire consequences, not only in the world at large, but particularly in the world of employment law.

Most employment-protection laws contain anti-retaliation provisions.  And courts are broadly interpreting and applying these provisions.
The U.S. Supreme Court has recognized and expanded the right to bring retaliation claims in a series of cases over the past several years.  In January, the Court ruled that Title VII’s anti-retaliation provision covered an employee who was fired shortly after his fiancée, who worked for the same company, filed a sex discrimination claim.  (Supreme Court Finds in Favor of Fired Fiance 01/25/2011)
In March, the Court held that the FLSA’s anti-retaliation provision, which uses the phrase “filed any complaint,” applies to an employee’s oral complaints. 
These cases follow prior decisions in the last five years in which the Court ruled that: 
·       Title VII’s anti-retaliation clause, which refers to “opposition,” does not require active opposition, but encompasses involuntary participation, such as making statements during an employer’s internal investigation;
·       Employees can bring retaliation claims under the ADEA;
·       Employees can bring retaliation claims under Section 1981 of Chapter 42 of the      Continue Reading...
Looking for Work? The DOL is Hiring
By: Donald Berner

The Department of Labor is currently hiring.  While this is good news for recent college graduates looking for work, this may not be such good news for employers.  The DOL is continuing to focus its resources on enforcement of the Fair Labor Standards Act (FLSA).  This focus can mean only one thing for employers -- an increased likelihood of a wage and hour audit.  The local DOL office in Wichita, which covers most of Kansas, has added several new investigators in recent months and is currently hiring yet another.  These recent hires are just now starting to get out of their office and into employers' offices.  These additional investigators likely will result in increased enforcement activity going forward.  In the short-term, employers should consider self-auditing their pay practices, with the guidance of legal counsel under the attorney-client privilege, to ensure compliance with the FLSA prior to getting a visit from the DOL.

Eggstra Pay: An Animated Video Short
By: Donald Berner

At the Foulston Siefkin LLP employment law seminar Vaughn Burkholder, Tara Eberline and Teresa Shulda discussed some common scenarios that human resources managers may be confronted with from time to time.  In response to numerous requests to see the videos again, we bring you a hopping-mad Easter Bunny as he deals with a payroll-related concern.  Will the complaining bunny get the carrot or the stick?  Click here to look in on the conversation.

School's Out -- Employ Carefully
By: Boyd Byers

Today my kids are at home enjoying their first day of summer vacation.  When I was a teenager, one first-day-of-summer-vacation ritual was repeatedly blasting the song "School's Out" by Alice Cooper for the enjoyment of everyone in town (from a boombox resting on the handlebars of a BMX bike in seventh grade, moving on to the woofers in the trunk of my friend's candy apple red '78 Chevy Nova by the time we were sophomores).  Another, more-constructive rite of summer for many teenagers is working a part-time job.  If your company employs workers under 18, make sure it complies with the sometimes-tricky child labor laws.

Fourteen is the minimum age for most non-agricultural work.  However, youth under 14 may deliver newspapers; perform babysitting or perform minor chores around a private home; perform in radio, television, movie, or theatrical productions; and work in businesses owned by their parents (except in manufacturing, mining, or hazardous jobs). 

Youth 14- and 15-years-old may work outside school hours in certain jobs approved by the Department of Labor, subject to time and hour restrictions.  For example, they cannot work more than 3 hours on a school day or 18 hours in a school week, or more than 8 hours on a non-school day or 40 hours in a non-school week.  And they may not work before 7 a.m. or after 7 p.m., except they may work until 9 p.m. from June 1 through Labor Day.  New regulations that went into effect last summer allow 14- and 15-year-olds to hold jobs not only in the retail, foodservice, and gasoline service industries (as before), but also perform office and clerical work, including in the advertising, banking, and      Continue Reading...

Wage and Hour Issues You Need to Know About
By: Donald Berner

Earlier this month at the Foulston Siefkin LLP employment law seminar, Jeff Hurt provided insights into a variety of issues that can arise under the Fair Labor Standards Act (FLSA).  Items discussed during the session included: 

  • The Department of Labor's (DOL) "We Can Help" initiative, which is designed to make employees more aware of their rights and how to file complaints if they believe those rights are violated.
  • The DOL, along with taxing agencies at the federal and state level, are looking to recover lost tax revenues by more closely evaluating independent contractor classifications.
  • The implementation of new regulations related to "tipped" employees and employees being compensated with a fixed salary for fluctuating hours.
  • The likely increase in retaliation claims under the FLSA following a recent U.S. Supreme Court ruling.

With the DOL's new enforcement efforts, it makes even more sense for employers to conduct a self-audit under the direction of legal counsel to ensure compliance and to manage the various risk factors. 

New DOL Regulations Issued
By: Donald Berner

The Department of Labor recently issued a set of new regulations covering a variety of wage-and-hour topics.  Click here to read a summary of the new regulations. 

Want to Make an Overtime Claim? There's an App for That!
By: Boyd Byers

On May 9 the U.S. Department of Labor announced the launch of its new smartphone application, a user-friendly electronic timesheet employees can use to track their hours worked and calculate wages they are owed.  The app allows employees to record regular work hours, break time, and any overtime hours for one or more employers.  Users can manually enter their time, or use simple “start work” and “stop work” buttons that automatically record their time worked.

DOL is providing this new technology to help workers keep their own time records rather than rely on their employers’ records.  If an employer fails to maintain accurate time records, the employee may then use this information as evidence to try to prove that he or she performed work for which she was not compensated.  

The app not only records hours, it also automatically calculates gross pay, including overtime pay at one-and-one-half times the regular rate for all hours worked over 40 in a workweek.  Users can view summaries of hours worked in daily, weekly, and monthly formats, with gross pay calculations.  They can then easily email these reports, which show up as attached Excel spreadsheets.  The app also includes a “Contact Us” page with a link to the DOL’s website and a function to directly send emails to DOL. 
The free app is currently compatible with the iPhone and iPod Touch.  DOL says it will explore apps for other      Continue Reading...
DOL Issues New FLSA Regs
By: Boyd Byers

Last week the U.S. Department of Labor issued new FLSA regulations. The final rules, which become effective May 5, 2011, reflect changes necessary to update the regulations to comply with statutory changes or to replace outdated examples. 

Tipped Employees.  As a result of recent increases in the federal minimum wage to $7.25 per hour, the new regulations clarify that the minimum cash payment required to tipped employees—redefined by statute and now updated in the regulations to mean an employee who customarily and regularly receives over $30 per month in tips—remains unchanged at $2.13 per hour (assuming the employee receives enough wages from tips to reach the minimum wage).  This effectively increases the maximum tip credit an employer may claim—the difference between the minimum wage and the minimum cash payment—to $5.12 per hour. 
The new regulations provide that tips are the property of the employee, whether or not the employer takes a tip credit, and cannot be used by the employer for any purpose other than as a tip credit or a part of a valid tip pool.  There is no limit on the percentage of tips that an employer may require an employee to contribute to a tip pool, but the pooled tips must be distributed only to employees who customarily and regularly receive tips and may not be retained for any other purpose.  Whatever the arrangement, the employer may not claim      Continue Reading...
The Dangers of Deductions from Wages
By: Donald Berner

A manager walks into your office and declares that the time has come to part ways with an employee.  As you work through the termination process, a beancounter in Accounting informs you the employee owes the Company $500.  After asking a few more questions, you learn part of the money owed is for Company products the individual bought on credit, and another part is for reimbursement for a training session the Company paid for.  Accounting suggests you just take the debt from the employee's final paycheck.  While this might seem like a clean and simple solution, it could create problems for you under the Fair Labor Standards Act (FLSA) and/or the Kansas Wage Payment Act (KWPA). 

The reconciling of the books on the final paycheck is a very common mistake made by Kansas employers.  This simple step of deducting money for obligations owed to the employer directly from an employee's paycheck seems fair and simple.  The problem is the FLSA and the KWPA--and the government agencies that enforce them--don't necessarily agree with that concept.  The KWPA prohibits employers from deducting money from an employee's paycheck unless the deduction accrues to the benefit of the employee.  You can be assured that the collection of a debt by the employer won't be viewed as a deduction for the benefit of an employee.  Anytime you find yourself tempted to hold money directly from an employee's paycheck, it would be wise to consult with your attorney to ensure the propriety of the action.  Finally, even if a deduction does not violate the KWPA, keep in mind that there      Continue Reading...

Health Care Reform and Nursing Mothers
By: Donald Berner

Did you know that providing break time and a private location for new mothers to express their breast milk is now a requirement under wage and hour law?  For the most part, employers we have worked with in the past have been sensitive to the needs of new mothers upon their return to work.  Now the federal government is mandating employer action in this area. If you have over fifty employees, the additional break time requirement applies to your company.  For those employers with less than fifty employees, the break time requirement applies unless you are able to show it is an undue hardship for your company to provide the additional break time.  For pratical purposes, even small employers (under fifty employees) should assume the requirements will apply to them.

The amendments to the wage and hour laws require employers to provide this additional break time to any employee that is not exempt from overtime.  The additional break time does not need to be compensated time unless the employer provides other employees with compensated break time for other purposes.  This could be problematic for an employer that allows multiple breaks for smoking and/or bathroom visits that are compensable. 

In addition to providing the additional break time, employers are required to make available a private space where employees will not be intruded upon by the public or a co-worker while expressing breast milk.  The rule specifically states that a bathroom is not considered an acceptable location for purposes of complying with the requirement. 

The short      Continue Reading...

Tips & Tactics -- Government Investigations
By: Donald Berner

One of the new realities for employers is the increased risk of a visit from an investigator working for the government.  These visits can come at any time, without warning, and may be conducted by any number of government agencies.  The typical visit for an employer is likely to be a wage and hour audit or an OSHA safety inspection.  While these (and any other agency visit) inspections are in widely varying areas, there are some common themes for employers to consider.  The worst time to prepare a workplace for an inspection/audit is when the inspector shows up at your door.  Here are a few quick thoughts should your workplace receive an unwanted visitor from the government:

  • Plan ahead:  The time to develop a game plan for an inspection is well in advance of the actual investigator's visit.  Responding to an inspection in "crisis mode" is highly likely to lead to mistakes or oversights.  The ultimate outcome is almost certainly not going to be as favorable to the Company as a situation in which a well-conceived plan is in place.
  • Communicate the Plan:  Make sure all management team members all the way down to the lowest level of management understands the Company's plan of action should an investigator arrive.  There is nothing worse than failing to implement a well-planned strategy because the individual meeting with the inspector doesn't know the strategy. 
  • Have a Core Team:  A group of individuals on the management team should be designated to handle the Company response to the arrival of any government investigator.  This group      Continue Reading...

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Don Berner, the Labor Law, OSHA, & Immigration Law Guy
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Boyd Byers, the General Employment Law Guy
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Jason Lacey, the Employee Benefits Guy
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