Monthly Archives: January 2016

New White Collar Overtime Exemption Rules Are Coming, Now What?

download (1)On December 1, 2016, employers will have to pay more to take advantage of the Fair Labor Standards Act’s (FLSA) so-called white collar overtime exemptions. To prepare for the upcoming change, employers need to know whether and to what extent they will be affected by the new overtime exemption regulations.

The new rules focus primarily on the minimum salary and compensation levels needed to qualify for the FLSA’s executive, administrative, professional and computer employee overtime exemptions. Employers can ask the following questions to determine the potential impact of the new overtime rules before it’s too late.

Are there any employees classified as exempt under one of the FLSA’s white collar overtime exemptions? If no, you should not be affected by the higher standard salary levels under the new rules. If yes, move on to the next question.

Do any of these employees ever work more than 40 hours in a workweek? If no, you should not be affected by the higher standard salary levels under the new rules. If yes, move on to the next question.

Do any of these employees earn a salary of less than $913 per week? (This works out to $1,826 biweekly, $1,978 semimonthly, $3,956 monthly or $47,476 annually.) If no, you should not be affected by the higher standard salary levels under the new rules. If yes, exemption classifications or compensation practices need to be adjusted before December 1, 2016.

The most appropriate adjustment(s) will typically depend on specific circumstances, such as the number of newly-nonexempt employees, their salaries, how often they work overtime and how much overtime they work. Depending on their situation, employers may decide to implement one or more of the following adjustments.

Increase Salaries. Perhaps the simplest and least disruptive adjustment would be to increase the salaries of exempt white collar employees to no less than $913 per week. Unfortunately, it may also be unrealistic for many employers. Though some salary increases may be small, others may be more than double.

Those choosing this option must remember that exempt status requires more than meeting the new minimum salary requirements. Primary job duties remain relevant under the new rules and employees still have to satisfy the applicable “standard duties test” to be exempt.

Pay Newly-Nonexempt Employees Overtime Compensation. The alternative to increasing salaries is to re-classify these exempt employees as overtime-eligible employees. Those working more than 40 hours in a workweek must be paid one and a half times their regular rate. Remember that employers must track the daily and weekly hours worked by all nonexempt employees, including the newly-nonexempt.

Paying overtime compensation may not be a problem for employees who rarely work or who work very little overtime. Despite paying more for occasional overtime work, it would still be less expensive than increasing salaries. The same cannot be said about employees who regularly work or who work a lot of overtime. Their overtime pay can add up quickly, possibly approaching or even exceeding $913 per week.

Prohibit Overtime. Newly-nonexempt employees can be prohibited from working overtime. If no overtime is worked, no overtime compensation is required. This option may be simple, but it may not be easy. Exempt employees typically work more than 40 hours in a workweek because they have more than 40 hours of work to do. Their work must still get done, but someone else will have to do it.

Adjust Personnel, Schedules or Assignments. Those who prohibit overtime may have to make various operational adjustments. For example, workload distribution and workforce scheduling may need to be adjusted to compensate for the loss of overtime work. In some cases, new employees may need to be hired to make up for any lost productivity.

Adjust Wages. Newly-nonexempt employees who are allowed to continue working overtime as always will end up getting more money for the same amount of work. Reallocating regular wages and overtime compensation is a way to keep the hours worked and amounts paid to newly-nonexempt employees largely the same. However, employers may not reduce an employee’s hourly wage below the highest applicable minimum wage (federal, state, or local) or continually adjust wages each workweek to manipulate the regular rate.

Employers shouldn’t wait too long to start planning. It takes time to change exemption classifications and compensation practices, particularly if they are substantial or complex. With all the publicity, it’s safe to assume that violations will be noticed not only by those who are affected by the new rules, but by the Department of Labor too.

To protect against the uncertainty and confusion surrounding the new rules, employers may benefit from having Employment Practices Liability Insurance to protect against various employment-related claims. Limited coverage for wage and hour claims may be available.

Employers should discuss the new overtime exemption rules with HR, payroll/accounting, managers and supervisors. Specific wage and hour training should also be considered. Please contact us if you would like more information about preparing for the new white collar overtime exemption rules.

To receive regular updates about developments which may affect your business, subscribe to The Human Equation’s biweekly news brief.

A Tool or a Fool for Discrimination?

download (29)12Disclaimer: This is an entirely fictional account, created to relieve the writer of the usual dry restraints of technical writing and to relieve you the reader the misery of reading it. Employment litigation after all is about the people and their stories.

Discrimination: Staking the Odds or Stocking the Shelves, That is the Question.

Algis stocked shelves and checked out customers in the local supermarket chain store. Gordon wasn’t too sophisticated in matters of social grace, but he had a basic respect for all people – a trait taught to him by his Lithuanian mother, Lina. Lina immigrated here as a young girl and raised Algis as a single mother. Algis grew up with stories of how men at his mother’s work harassed her. He wasn’t about to let that happen to the young women at the grocery store.

Gordon was Algis’s supervisor. Gordon was married, overweight, and gruff. He viewed himself as quite the charmer, despite complaints of body odor. He became a store supervisor just a year earlier. Algis had worked for the supermarket chain for nearly 15 years, and had seen a number of supervisors come and go, but Gordon was unique. Gordon showed clear preference for the young female workers whom he teased, and whom he rewarded with better schedules and promotions if they returned the attention. But some of the women resented Gordon’s extra attention. They complained among themselves that Gordon’s “teasing” was often sexually offensive, and seemed to become more sexually explicit with time. The women also resented that some of the women who went along with Gordon became his “favorites” while they were denied pay increases or promotions.

Algis watched all this interaction between Gordon and the women from a distance. The women didn’t include him in their conversations about Gordon, but he could see for himself what Gordon was doing, and it reminded him of the men Lina had described at the dinner table. He felt the need to report Gordon’s behavior. Should he confront Gordon directly, he wondered. He decided to report Gordon to the store manager. The store manager, following company policy, took the matter to Divisional Human Resources, who investigated, and not surprisingly, found no sexual harassment, but did report some “inappropriate behaviors,” and gave Gordon a hand slap that went into his personnel file as a “first warning.”

Discrimination in the Words of Walter Scott.

“O, what a tangled web we weave when first we practice to deceive!”

The Human Resources investigator had promised Algis confidentiality, but she disclosed to Gordon that Algis was the accuser. Gordon for a while pretended not to know, and for several months “laid low” to avoid being detected in his new mission to get rid of Algis. His chance came with he found expired product on shelves that Algis had failed to remove and replace. Gordon prepared a long “write-up” that included references to the public health and the reputation of the store, and warned Algis one more error would result in termination. A few weeks later, Gordon took expired product from the storage room, and late one evening when no one was looking, removed current labels and replaced it with the expired items. The next day he did a store inspection with Algis and several other clerks, Gordon “discovered” the expired product, blamed Algis, and proceeded to report the infraction to to his store manager, with a recommendation for firing.

The store manager then contacted the regional manager, who reviewed the facts and determined the firing was justified, and so signed off. In the Company’s chain of command, the store supervisor could not fire employees without a review and approval by the store manager, the regional manager, and the human resources manager. All three in Algis’s case found cause to terminate.

Discrimination Defenses

So when Algis sued the Company for unlawful retaliation, the company raised a number of defenses including:

    1. Algis wasn’t the victim of retaliation because the persons making the decision were not the subject of his earlier “hostile work environment” complaint, and they didn’t know about the alleged harassment or that Algis had complained.


    1. Algis was fired for good cause.


  1. The long period of time between the complaint and the firing was itself evidence that the firing was not caused by retaliation.

The Company felt so strongly it could win on these defenses that it filed a motion for summary judgment to have Algis’s case dismissed as a matter of law. But Algis’s attorney raised several cases that persuaded the court to let the case go to jury trial:

Reeves v. Safeway Stores Inc. (2004) 121 Cal.App.4th 95, 114; Dejung v. Superior Court (2008) 169 Cal.App.4th 533 and Staub v. Proctor Hospital (2011) 562 U.S. 411.

Algis contended these cases allowed his case to go forward on the premise that while Gordon was the only person motivated to retaliate, he influenced the others with his false information. The court agreed, following the “cats paw” doctrine. That doctrine is basically that if there are good actors and bad actors in the termination decision process, the decision will be deemed entirely bad if the bad actor influenced the outcome.

Discrimination Proof and Timing

On that matter of timing of the decision, Algis’s attorney threw the gamut of cases before the court holding that time is sometimes independently a sufficient proof that the firing was caused by the retaliatory motive. Of course, the short the time, the more likely the inference of causation, but there is no outside limit set by the cases. The U.S. Supreme Court has explicitly held that there is not necessary outside time limit to sustain a finding of causation, but in the particular case then before it, found that twenty weeks (5 months) was too long. Clark County School Dist. v. Breeden, 532 U.S. at 237-74. In Thomas v. City of Beaverton (9th Cir. 2004) 379 F.3d 802, 812, seven weeks did not preclude the finding of a causal link even without other evidence of causation. Alas, in this uncertainty, only this is sure: “Come what come may, time and the hour run through the roughest day.” [Shakespeare, Macbeth].

Discrimination Aftermath

Algis survived summary judgement, and with still more fight ahead, obtained a specific jury finding that the retaliation for his reporting of what he believed to be a “sexually hostile work environment” was a “substantial motivating factor” in his termination. It helped a bit when Algis’s attorney introduced surprised video footage showing that Gordon had made the “expired product” switch the night before the store inspection. Algis’s attorney received the digital time stamped recording from one of the quieter female store clerks who had too long tolerated Gordon’s antics. From “All’s Well That Ends Well,” I leave this final quote: “Love all, trust a few, do wrong to none.”

How Can Employers Benefit From the California Labor Code

download (28)It is fun working in California. The state ensures you do not face any issue regarding workplace rights, safety or health. Actually it is the California Labor Code that stands by you in all adverse situations. But what about the employers? Who stands for them? Apparently nobody. So if you are an employer in California and a good one that too, how are you to save yourselves from citations and penalties?

The laws of California are becoming stricter day by day and a single mistake can cost you your whole career. Although there are numerous organizations trying to help out the employer by constantly updating them regarding Cal OSHA and California labor laws, very few of them are actually concerned about the employers’ benefits. All they do is to make them aware so that they do not commit a mistake that they have to pay a huge price for. However, a few HR consultants are eager to help the employers in California not only to prevent themselves from getting penalized but also acquire certain benefits from the existing California Labor code. How? Read along to know.

You can popularize your brand – Many companies in California, including your competitors are not much aware of the labor laws. However, all of them are aware of the basics so as to save themselves from citations. But, you can be an exception. With the help of an experienced HR consultancy firm, you can take the initiative of letting your employees knows their rights and privileges they are entitled to under the Labor laws. Thus, you will be known among your employees as the keeper of their rights and not the violator. People will flock to your company and love to work under you.

You can increase awareness regarding Safety and health – An employer who acknowledges the power of human resources understands one thing. If you can utilize this power, it will take you to heights. But if you misuse it or try to exploit this power, it will be the one to bring you down. Thus, your employees should be treated as gems of the organization. Take good care of them and promote their health and well being. Invest in holding medical campaigns, vaccinations and other things necessary to maintain the health of your workers. Give them their sick leaves without grudging and you will see they will come back smiling and say, “You are the best Boss!” Sounds like music to the ears, right? Well, indeed it is.

See to that your employees are getting the best of everything – Only recently, a new law pertaining to the Cal OSHA heat illness prevention program states that you need to supply clean and purified water as well as make arrangements for adequate shade to ensure your workers’ health and safety. Besides providing the same, why don’t you go check out on how they are doing from time to time? Okay, you are busy but you can at least hire someone to see whether your workers are making the best of everything, can’t you? That will show them that you care and have faith, this relationship building has major outcome in the future.

Impose a strict anti-harassment law – Issues like sexual harassment or discrimination should be taken seriously so as to provide your employees a sense of safety. This is crucial if you have a large organization where all of your employees work in unison with each other. While building healthy work relationships enhances the growth of your business, unhealthy incidents can ruin your name once and for all. Hence make sure that you take such issues and complaints seriously.

Thus, can you see how you, as an employer, can make use of the California Labor code to make your business one of the most reputed ones in the state? Take help from an expert HR consultancy firm exclusively for the employers in California to know all about the recent labor law updates so that you can make your employees aware of the same. If you take care of your employees, the law will surely take care of you.