FLSA issues for 2018

The USDOL in 2018 will still be looking at major wage and hour issues.

As we enter into a new calendar year there are a lot of Department of Labor issues employers should be concerned with in handling employees. I am not going to cover all of them, but I do want to talk about several.

Employee classification

One of the biggest issues of 2017 will continue to be a major issue in 2018. Employee classification has multiple parts to it. First, misclassification of employees as exempt, thus denying them overtime earnings, will continue to be huge. This is not the issue of salary level, I will get to that in a minute, rather this is the issue of wrongfully classifying employees as exempt employees under the current standards. There are still numerous companies, knowingly and unknowingly, not paying employees overtime. One such case involves IT workers in Connecticut and California, where 1000 or so workers were improperly defined as exempt employees. Unfortunately, this company will be paying a large fine, plus the owed overtime because they are a repeat offender. In 2005 they paid $24 million for the same violation.
Many companies make this same mistake just due to ignorance of the law. They think that paying someone a salary is the equivalent of making the employee exempt. If you are one of those companies that don’t know the law then you may be in for surprise in 2018. Employees are becoming much more educated on this issue and may report the company to the DOL. If you are unsure, educate yourself.

New definition of the exempt salary level

One of the components of being an exempt employee is that have to be paid on a salary basis, but it doesn’t stop there. That salary has to be at a certain level. Currently, that salary has to be the ridiculously low level of $23,660 per year or $455 per week. In late 2016 the Obama administration caused a firestorm of controversy by raising it to almost $48,000 per year. Lawsuits were filed and that amount was put on hold after causing a great deal of difficulty for companies. Under the Trump administration’s DOL, Secretary Acosta has said the rules do need to be rewritten and the salary level redefined. According to a SHRM announcement that new level, surmised to be in the mid-$30,000 level, should be in place by October of 2018. BNA attorneys feel it will not be in place until 2019.

Independent Contractor

Another area of compliance that is getting a great deal of attention from the press, employees, and the Secretary of Labor, is the use and definition of independent contractors. The “gig” economy is finally getting much-needed attention from the DOL. Secretary Acosta, however, sees that as an issue that needs to be decided by Congress. Given how dysfunctional Congress is these days that is probably not something that will be decided in 2018. In the meantime, companies that continue to violate both the DOL and IRS rules on the use of independent contractors do so at their own peril. I provide some guidance here and here.

More assistance to be provided

The good thing with this new DOL is that they are going to be providing more assistance to employers and producing less regulation. Opinion letters, as I mentioned in The “New” DOL working toward being balanced toward employees and employers, employers can now request help from the DOL on issues they are unclear about. Reviewing Request an Opinion letter is always a good place to start. Naturally, contacting your local knowledgeable HR consultant and/or your employment attorney works as well.

In 2018

In 2018 employers will find many changes and a friendlier DOL. However, you still have to know the rules, still have to follow the rules, and will still get punished is you are not being a good employer. The new DOL is not all about employers. It is there to provide a balance between employees and employers.

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