5 costly employment myths we need to discard

Everyone knows a good myth or two. And as it turns out, a lot of those myths end up being taken at face value and acted on as if they were true — and it’s costing employers. But much like the boogeyman, many of these employment “facts” exist only in our imaginations. 

During SHRM’s 2016 Annual Conference & Expo, HR consultant Hunter Lott presented on a few of these myths with the intent of stopping employers from acting on them.

They are:

“Back in my day, there was company loyalty. Now people jump jobs for personal benefit.”

Ever have a manager who wouldn’t hire a candidate because the person was only at a previous job for a couple of years, figuring the candidate is a “job jumper”?

Or has someone left your company only have the manager write off the person’s reason for leaving as “disloyalty”?

In the first case, you may have lost out on a great hire. In the other, your company may have overlooked a more serious workplace situation. Both decisions were made because job hopping is sweeping the nation like an epidemic, right?

Well, when you look at recent data from the Bureau of Labor Statistics, you see that employee tenure has actually been on the rise in the past thirty years. In 2014, the median number of years employees stayed at a company was 4.6 years. Compare that to 1983 and 1998, where the median was around 3.5.

So it’s safe to say the misconception that people are less loyal to a company these days is busted.

“We can’t punish Jill. We have to treat everyone equally.”

Providing everyone an equal opportunity doesn’t mean equal treatment. By that, Lott means you must reward good employees for good behavior and punishing bad employees for bad behavior.

You don’t have to be held hostage by bad employees, as evidenced by an Asian professor’s lawsuit against City University of New York. The university dismissed the professor due to her aggressive behavior toward co-workers and students. The employer had immaculate documentation outlining the behavior in her performance reviews, which eventually lead to its courtroom victory in the ex-professor’s discrimination lawsuit.

Bottom line: If someone isn’t acting appropriately, and refuses to or can’t change, let the person go. You wouldn’t apply equal raises to both your top and bottom performers, so why would you hold onto a bad employee when even the EEOC supports termination for bad behavior/performance? Just make sure all the documentation is there before you terminate.

“You can’t talk about salary in the workplace.”

This taboo topic is still in a few handbooks across the nation and spoken about in hushed, forbidden tones. But shutting down conversations about working conditions — which include compensation — is illegal, according to feds like the National Labor Relations Board (NLRB).

Yet, despite the NLRB’s strong stance against these sorts of confidentiality policies, punishing employees for discussing salaries still happens.

While such discussions may put employers in uncomfortable positions, you can’t stop employees from talking about pay.

“Trust your gut.”

Lott brought up a manager who only hired “Georges” or “Georgettes” because a guy or gal with George in the name had never steered the wrong before. This is an example of making a decision based on a gut reaction. It’s the emotional fallacy that what worked before is sure to work again.

As humans we’re comfortable with keeping things at the status quo. But Lott went into great detail about how dangerous these types of thought processes — or rather lack of thought processes — can be.

Turns out, when you rely more on quick-thinking and “gut-feeling,” you’re more likely to be wrong. Harvard Business Review’s (HRB) March 2016 issue expounded on the idea that the more confident a person is, the more likely he or she is to over-estimate their ability to make decisions based on their gut.

And HBR also found that people who relied on a mix of emotional and logical processes — revisiting and reassessing their data continuously — were far more likely to be accurate in the decision making process.

“It’s dangerous to be an employer. The EEOC is out to get everyone.”

Here’s some data to help ease this fear of the EEOC:

The EEOC released its Performance and Accountability Report (PAR) for 2015, and it showed that out of the 157,833,000 employees the EEOC covers, it received 89,385 formal charges in 2015 (that’s a charge rate of 0.06%). And of those formal charges, 65% were eventually found to have no reasonable cause and were dismissed.

In the end, what tends to save companies from a day in court is proper documentation and acting on facts — not biases or assumptions.

Recordkeeping: What you must keep – and for how long

The trouble with recordkeeping at a lot of companies: You don’t know how complete your records are until you get involved in litigation or an audit. But by then, it’s often too late to fill in any critical gaps.  

That’s why it’s essential to know — before you find yourself in some kind of legal dispute — what documents you need to hold onto and what you can trash without putting your company at risk.

To be on the safe side, many employment law attorneys recommend you keep everything for at least five to seven years after an employee has left.

That’s sound advice — if you’ve got the storage and personnel to keep track of all those docs for that long. But it may be overkill, and often isn’t necessary to comply with many employment law record retention requirements.

Here’s a rundown of document retention rules under laws such as the FMLA, COBRA, FLSA, ERISA, HIPAA, ADEA and Equal Pay Act, courtesy of the employment law experts at the law firm Lindquist & Vennum:

Employee leave

The FMLA requires employees to hold on to a slew of employee leave-related paperwork for at least three years, including:

  • Identifying data regarding the employee on leave, which includes name address, occupation, pay rate, terms of compensation, days worked, hours worked per day, and additions or deductions in pay
  • Dates and hours of FMLA leave
  • Copies of employer notices to employee(s)
  • Documents describing employee benefit and premium payment info
  • Docs describing any disputes over FMLA benefits, and
  • Copies of the company’s FMLA policy.

Benefits plans

A slew of laws (ERISA, COBRA, ADEA, HIPAA) layout what benefits plan-related documents companies must hang onto, and the length of time docs must be saved varies by the enforcing law. Here’s a summary of the essentials:

  • Employee benefit plan governing documents — keep indefinitely
  • Summary plan descriptions and notices — keep indefinitely
  • Records backing up the information reported on Form 5500, such as vesting and distribution info, coverage and nondiscrimination testing data, benefit claims info, enrollment materials, election and deferral data, and account balance and performance data — keep for six years after the Form 5500 filing date
  • Evidence of fiduciary actions — keep indefinitely
  • HIPAA privacy record documents — keep six years from the date it was created or the date it was last in effect, whichever is later, and
  • COBRA notices — no required retention period, but it’s recommended these documents be kept for at least six years from the date they were given.


Most compensation-related documents, with the exception of Certificates of Age (keep those until termination), do not need to be kept longer than three years, including:

  • Records containing employees’ names, addresses, dates of birth, occupations, pay rates and weekly compensation — keep for three years
  • Collective bargaining agreements and changes/amendments to those agreements — keep for three years
  • Individual contracts — keep for three years
  • Written agreements under the FLSA — keep for three years
  • Sales and purchase records — keep for three years, and
  • Basic employment and earnings records, like wage rate tables used to calculate wages; salary, wages and overtime pay info; work schedules; and additions to or deductions from wages — keep for two years.


There are a number of hiring and recruitment-related materials employers must hold on to, including:

  • Hiring documents, like job applications, resumes, job inquiries and records of hiring refusals — keep for one year from date of action
  • Job movement docs, such as promotion, demotion, transfer, layoff and training selection info — keep for one year from date of action
  • Test materials, including test papers and employee test results — keep for one year from date of action
  • Physical examination results — keep for one year from completion, and
  • I-9 forms — keep for three years after the date of hire or one year after the date of termination, whichever is later.

Litigation changes the equation

Once you’re on notice that any matter may become the subject of litigation or an audit, you must keep all documents related to that matter until the case has come to a conclusion — no exceptions.

In addition, you must anticipate litigation when you receive a notice that a lawsuit is being filed, notice of a DOL or EEOC charge, an attorney demand letter, or an internal complaint.

What you must keep in those instances includes:

  • the personnel file of the complainant
  • all documents related to his or her application, hiring, promotions, transfers, disciplinary actions, evaluations, training, pay and medical records
  • job postings
  • job descriptions
  • complaint records of other employees
  • investigation notes and documents
  • supervisor notes and records, and
  • anything related to an alleged harasser or wrongdoer.

Bottom line: The best way to successfully fend off litigation or an audit is to be able to produce strong, comprehensive documentation.

Court illustrates how HR pros can be personally liable for FMLA blunders

Heads up: The stakes have been raised on FMLA compliance for human resources professionals.  

That’s because an appeals court not only ruled that HR pros could be personally liable for FMLA violations, it also offered employees a simple blueprint for disgruntled workers to make such claims.

Took aim at HR director

Understanding why the court ruled the way it did will go a long way toward helping you and your company avoid falling victim to a similar fate.

The case was Graziado v. Culinary Institute of America, Garrioch. Garrioch was the HR director.

Here’s some background: When Cathleen Graziado, a payroll worker for Culinary Institute of America (CIA), took FMLA leave to care for her sons, the company questioned the validity of that leave.

In the communication that followed, the director of HR, Shaynan Garrioch, said Graziado’s documentation wasn’t sufficient. The company then set a deadline for Graziado to submit the proper documentation but, when she failed to do so, she was fired.

Following her termination, Graziado filed an FMLA interference and retaliation suit against CIA as well as Garrioch.

In its attempt to get the suit dismissed, CIA’s attorneys argued that Garrioch wasn’t an employer under the FMLA and couldn’t be held individually liable in the suit.

This argument seemed like a no-brainer, and a lower court agreed and dismissed this and the rest of Graziado’s claims.

FLSA tie-in

But on appeal, a court disagreed and sent the case to trial. What the appeals court said about the definition of employer is especially worrisome for HR and benefits pros.

In regards to the HR director’s individual liability, the court ruled the FMLA’s definition of “employer” – defined in the law as one who “acts, directly or indirectly, in the interest of an employer to any of the employees of such employer” – basically mirrors the definition under the FLSA.

In fact, the FMLA was initially adopted as an amendment to the FLSA. Because of these factors, the court said the test used to evaluate employers under the FLSA should be applied to FMLA cases, too.

So the court applied the FLSA’s control or “economic reality” test to the claim CIA’s director of HR was an employer and found two key reasons to support that claim:

  1. The director of HR controlled Graziado’s schedule and conditions of employment, and
  2. She had the power to fire Graziado.

Result: There was plenty of evidence the director of HR controlled Graziado’s FMLA rights from an employer capacity. Therefore, she could be personally liable for FMLA violations.

Doublecheck everything

The idea of HR and benefits pros being personally liable for FMLA issues is particularly alarming when you consider how often courts hand down pro-employee FMLA verdicts.

This ruling is yet another reason to doublecheck all FMLA decisions to ensure compliance – especially those involving termination – and always try to err on the side of caution.

In addition, employers may want to consider ramping up their FMLA training to stay safe.

11 remarkable overtime rule tips from DOL insider

Turns out there’s more to the FLSA’s overtime exemption rule changes (and salary threshold) than meets the eye. A former DOL administrator recently opened a lot of employers’ eyes with what she had to say about the new rule. 

In front of a packed room filled with more than 1,000 HR professionals at the SHRM16 Annual Conference & Exposition, the former administrator of the DOL’s Wage and Hour Division, Tammy McCutchen, surprised a lot of attendees with her insights on the rule changes.

McCutchen was the main architect behind the 2004 changes to the FLSA’s overtime exemption rules. So she has a unique handle and perspective on how the new overtime rule will be enforced and how employers can go about complying with it. She’s now an employment law attorney with the firm Littler Mendelson, P.C. and counsels businesses on how they can comply with the FLSA.

In her presentation, she shared 11 critical tips about the law every employer should see:

1. Think $913, not $47,476

McCutchen said many employers are focusing on the $47,476 annual threshold under the FLSA’s salary basis test. But she warned not to do that.

Why? It’s a week-by-week test. Therefore, employers need to focus on making sure exempt employees are paid $913 per week.

If there are weeks that employees don’t make at least $913, the DOL will consider them non-exempt (or, rather, the DOL’s new favorite term: “overtime-eligible”) for those weeks.

2. Think $821.70 when adding in bonuses

There is an exception to the $913-per-week rule: it’s when employers will count nondiscretionary bonuses toward up to 10% of the threshold.

In that case, exempt employees must be paid at least $821.70 per week. Then, when a bonus is paid out (and they must be paid out at least quarterly), the employees’ pay for that quarter must average out to at least $913 per week.

3. Nearly every bonus is nondiscretionary

McCutchen said the DOL’s definition of nondiscretionary bonus is very, very broad.

As a result, she said just about every bonus employees receive will be nondiscretionary.

4. The bonus method is risky

McCutchen said she’s hesitant to advise employers to go with a strategy in which they’ll attempt make up any shortfall between the $821 figure and the $913 figure with a bonus.

Why? Because if an employee fails to earn the bonus, or the company makes a calculation or payroll error that results in an employee making less than $913 in any week within a quarter, the employee must be classified as OT-eligible for that entire quarter — and that can get very expensive very quickly.

As a result, she suggests just rolling bonus pay into an employees’ base salaries to get, and keep, them above the $913 threshold. Or, at the very least, she says employers must consult with outside legal counsel and present that counsel with a plan as to how they plan to make the bonus calculations/payments. Then, she implores employers to audit their bonus processes frequently.

Plus, she said, there’s the whole issue of what happens when an employee leaves in the middle of the quarter. In those causes, she said to play it safe and pay the person any bonus amount necessary to get them over $913 per week worked.

5. With highly compensated employees, don’t forget the last “4”

McCutchen said if an employee makes more than the new highly compensated employee salary threshold — $134,004 — chances are they’ll pass the minimal duties test thrown at them. But employers can’t forget the last “4” on that number.

She said she’s hearing the number “$134,000” tossed around a lot, and she warned that setting someone’s salary at $134K won’t make them a highly compensated employee under the rule.

6. Expect a big increase in three years

As you’ve likely heard, the salary basis threshold will be reset every three years.

Currently, it was set at the 40th percentile of earnings in the lowest wage census region — the South — and it will be reset to that figure every three years.

But McCutchen said the data set the DOL will be looking at three years from now will be much different than the data set it used to establish the $913 figure. Due to this year’s change to the FLSA, she said she expects a lot of the lower salaries to drop out of the data set over the next three years and to see a lot of the higher salaries climb.

As a result, she said the threshold will likely be much higher when the FLSA is updated again in January 2020.

She also reminded employers that they’ll get 150 days’ notice before the 2020 salary threshold kicks in.

7. Make the switch over Thanksgiving

As you know, the new salary threshold kicks in Dec. 1, 2016. Do you know what day that is?

It’s a Thursday, and because of that McCutchen said you don’t want to have employees’ new salaries or classifications kick in on that day.

Why? It’ll result in an administrative nightmare in which some employees will be exempt for half of the week and non-exempt the second half.

A better way: Make the change the week of Thanksgiving. She said due to the holiday, it’s unlikely newly OT-eligible employees will have to work overtime that week, which can make the transition a lot easier (without making it more expensive).

8. Remember state notice requirements

Some states require employers to provide workers with advance notice of changes in their pay, and employers can’t forget to abide by them.

McCutchen said such laws tend to require a one pay period heads up — and typically just for reductions in pay. Meanwhile, Missouri requires employers to give workers 30 days’ notice for pay reductions.

9. Meet the most stringent duties test

McCutchen pointed out that 18 states have duties requirements that differ from federal regulations.

Which ones are employers required to follow? Answer: An employer must follow the more difficult of either its state’s duties test or the federal duties test.

10. The rule changes aren’t going away

McCutchen said the chances are “slim to none” that the new exemption rule gets nixed or delayed prior to the effective date of Dec. 1.

11. There is a cost-neutral salary formula

One option employers are considering for affected employees who work 40-plus hours per week is dropping those employees’ base pay rates and then allowing those folks to make up for the shortfall by receiving overtime pay.

But some employers are struggling to determine what to reduce those employees’ base wages to.

So McCutchen shared a DOL-recommended formula for determining what an employee’s pay rate should be, so that when the person works overtime their total compensation isn’t more than what he or she’s currently taking home.

In other words, it’s a cost-neutral formula. But it’s really only cost-neutral if you have a good estimate of the person’s expected weekly hours (including overtime).

Here’s the formula: Weekly Salary/(40+(OT Hours x 1.5))

Here’s how it would work: Say you have an employee who works 45 hours every week with a weekly salary of $800. His hourly pay rate for the purposes of calculating overtime is $20 per hour ($800/40), so his OT-rate would be $30 per hour ($20 x 1.5). Now if this employee worked 45 hours per week, he’d make $950 per week ($800 + $30 x 5).

Now let’s use the cost-neutral formula for this same person working 45 hours per week. His base weekly pay rate would be dropped to $16.84 ($800/40+(5 x 1.5)). That would mean his OT-rate would be $25.26 ($16.84 x 1.5). So his weekly take-home pay for 45 hours’ worth of work is $800 ($16.84 x 40 + $25.26 x 5).

But McCutchen did admit this is a hard sell for this employee because it basically means a pay cut if he doesn’t get five hours of overtime each week.

What’s annoying employers most about the ACA now?

Recently, employers were asked which part of the ACA they most want to see changed. And in what’s likely to be a surprise to many, the No. 1 answer wasn’t the employer mandate. 

Although 70% of the 644 employers surveyed said they’d like to see the employer mandate repealed, it still wasn’t the highest vote-getter.

What was? Repealing the excise or “Cadillac” tax. All told, 86% of employers said eliminating the tax on high-cost health plans was atop their “Wish List” of the things they’d like to see done to the ACA.

The survey was conducted by the consulting firm Mercer.

So the top five changes employers would like to see to the ACA looked like this (employers could place multiple votes):

  1. Eliminate the excise or “Cadillac” tax — 86%.
  2. Repeal the employer mandate — 70%.
  3. Change the definition of a full-time equivalent employee to one who works 40 hours per week — 66%.
  4. Repeal and replace the ACA entirely — 54%.
  5. Repeal the individual mandate –51%.

Just missing the top five was: Allowing the use of stand-alone HRAs to purchase individual coverage — 51% (it received fewer “strongly favor” votes than did repeal the individual mandate).

The biggest impact?

When asked about the impact of the ACA on their organizations, employers said it:

  • created a significant administrative burden — 84% (with 51% saying the burden was “very significant”)
  • resulted in making unwanted plan design changes to avoid the excise tax — 29%, and
  • generated higher costs — 20%.

Has enrollment changed?

Employers were also asked if their health plan enrollment had changed as a result of the employer mandate, and the results closely mirror reports from the Congressional Budget Office (CBO):

  • “No” — 74%
  • “Yes,” an increase — 22%, and
  • “Yes,” a decrease — 4%.

The CBO has reported there’s been virtually no change in the number of employees enrolling in company-sponsored health coverage as a result of the ACA.

In a surprise move, Supreme Court offers compromise on contraceptive issue

Just when HR pros were all but certain the Supreme Court was going to issue a split decision in the case centering on the Affordable Care Act’s contraceptive coverage mandate, the High Court surprised everybody by doing something it hasn’t done in well over half a century.  

At issue in the Supreme Court case was a religious objection to ACA’s contraceptive coverage mandate.

As HR pros know, the healthcare reform’s birth control mandate requires companies to cover insured employees for the use of all contraceptives without any cost-sharing.

This isn’t the first time religious groups have objected to the contraceptive coverage mandate, but it seemed as if the Obama administration eased their concerns when it carved out a religious exemption to the mandate. Under the exemption, religious groups would simply have to fill out a form, submit it to their insurer and then they wouldn’t have to provide the coverage that went against their beliefs — the feds would do it for them.

Problem solved, right? Many religious organizations seemed satisfied with the exemption, and it has worked well since it took effect a few years ago. But some more conservative groups felt the exemption doesn’t actually go far enough.

Their reasoning: By signing the exemption form, they were directly enabling someone to provide the contraceptive coverage, which essentially makes them complicit in something that goes against their religious beliefs.

And that’s what was at the heart of  Zubik v. Burwell.

Writing on Slate.com, Dahlia Lithwick summed up the complicated case like this:

“While churches, synagogues, and mosques were exempted from the Affordable Care Act’s employer-provided contraception requirement, religious nonprofits that object to affording their workers birth control were granted the aforementioned accommodation. So these employers are no longer on the hook and the insurance companies provide the contraception directly themselves—from separate funds and using separate communications. In these seven consolidated cases, the nonprofit objectors have claimed that the very act of filling out the form requesting the accommodation, or notifying the government, itself triggers something they deem to be a sin.”

A supplemental solution

While many media outlets were reporting the Supreme Court was likely to come to a 4-4 deadlock, the Court decided to take an outside-the-box approach to the issue. Rather than coming to a decision based on the facts of the case, the Court offered its own compromise to the parties involved and asked if they’d agree to that compromise.

How rare was such a move? Well, the last time the Court did something like this was back in 1953, during the landmark case Brown v. The Board of Education of Topeka.

Here was the Court’s latest compromise proposal: Objecting religious organizations can get a contraception-free insurance plan and the organization’s insurance company would provide the required contraceptive coverage via a supplemental plan. Result: Employees get all of the coverage they are entitled to under Obamacare, and the objecting religious organizations aren’t complicit in providing coverage that violates their religious beliefs.

Both the government and the conservative non-profit organizations said they’d accept the High Court’s compromise.

Here’s what trashing resumes, applications can cost you

A recent settlement of an EEOC lawsuit is a powerful reminder of just how important it is to retain job seekers’ application materials — and what it can cost if you fail to. 

Last fall, HR Morning reported that Coca-Cola Bottling Company of Mobile, an Alabama-based subsidiary of Coca-Cola Bottling Co. Consolidated, was being sued by the EEOC.

The agency claimed that soda maker and bottler twice violated federal law when it refused to hire Martina Owes.

Specifically, the EEOC accused Coca-Cola of:

  • Sex discrimination. The EEOC claimed Coke violated the Civil Rights Act when it refused to hire Owes. It said the company hired two less-qualified men to fill vacant warehouse positions over Owes, despite the fact that she had all of the warehouse and forklift experience required for the positions.
  • Recordkeeping violations. The agency also claimed Coke violated federal recordkeeping requirements by not preserving all of the application materials related to those positions.

The agency sued only after attempts to reach a settlement through its conciliation process failed.

But, apparently, Coke had a change of heart while preparing its defense strategy. The EEOC just announced that it has reached a settlement with the Mobile bottling plant.

What’s it going to cost?

Coca-Cola has agreed to pay Owes $35,000 to settle all the charges against it.

The terms of the settlement also dictate that Coke:

  • cease from future discrimination
  • conduct annual anti-discrimination and anti-retaliation training of its Mobile employees for three years
  • develop new or revised anti-discrimination policies
  • create a new or revised written hiring process, and
  • designate a director-level employee to coordinate its compliance with anti-discrimination laws and compliance with the settlement decree.

What you must keep, and for how long

This case highlights the importance of retaining application materials.

Chances are when the EEOC starts snooping around for wrongdoing in your hiring process, it’s going to request all of your hiring materials — past and present. And you’d better be able to produce them, or expect the agency to file charges.

That brings us to the $35,000 questions:

  • How long do you have to keep application materials? The rule under the Age Discrimination in Employment Act is a minimum of one year. But if you’re aware the applicant is over 40, it’s smart to retain them for at least two years. This rule also applies to resumes, references checks and background check materials.
  • What about personnel and employment records? The EEOC requires you to keep them on file for at least a year.
  • Payroll records? Three years.

Now if your company is being charged — or you suspect it will be — with some form of wrongdoing, then you’ve got to keep all of these materials until the matter is resolved.

New FMLA poster issued by DOL: But do you have to use it?

The DOL just issued a new General FMLA Notice for employers to hang in their workplaces. 

The notice can be found here.

Now on to the big question: Do employers have to use it?

The answer: Employers covered by the FMLA must hang the new poster or stick with a pre-existing poster that outlines the same info.

In other words, you’re not required to swap out your current poster for the new one. But there are some reasons you may want to.

For starters, the new poster is organized in a much more reader-friendly way than the DOL’s last poster.

So if you’re not a fan of your current poster’s layout, this may be a more attractive option.

The requirements

Just to be safe, let’s recap the DOL’s regulations regarding the poster.

Employers covered by the FMLA must display in a conspicuous place — and keep displaying — a General FMLA Notice explaining the law’s protections and requirements, as well as how employees can file complaints of violations of the FMLA with the DOL’s Wage and Hour Division.

The notice — i.e., poster — must be:

  • prominently displayed where it can be easily seen by employees and job applicants
  • displayed even if no employees are FMLA eligible, and
  • provided to each employee. This can be done via an employee handbook distributed to all employees, guidance distributed to employees explaining benefits or leave rights, or a general notice to all new employees upon hire.

Electronic posting is permitted as long as it meets all the posting requirements otherwise.

If a significant portion of workers are not English-literate, the employer must provide the notice in a language in which those employees are literate.

Violations of the regulations can result in a civil penalty of up to $110 per offense.

New FMLA guidance

In conjunction with the new General FMLA Notice poster, the DOL also issued a brand new 76-page guide on administering the FMLA.

While the guide doesn’t impose any new requirements on employers, the guide’s purpose — much like the new poster — is to explain things in a more reader-friendly manner. It’s intended for employers.

Some of the highlights:

  • It includes flowcharts outlining the course of a typical leave request from beginning to end.
  • There’s a “Did You Know?” section that outlines some of the law’s lesser-known provisions.
  • Charts are included to help explain the medical certification process — i.e. What’s required.
  • It includes an overview of Military Family Leave.

You can grab the guide here.

DOL’s final overtime rule moves forward: What’s next?

Get ready: The DOL’s final rule revising the white-collar overtime exemption regulations has advanced. So employers now have a pretty good idea of when it’ll go into effect. 

The DOL just sent the final rule to the White House’s Office of Management and Budget (OMB). This is the final step before the rule is published and made public for all to see.

If the OMB follows its normal review timeline, it should be approved in four to six weeks (although, it could take months).

So if it sticks to its normal schedule — and there’s no reason to think it won’t — employers should be able to get eyes on the final rule by early- to mid-May.

Avoid Congressional roadblocks

The fact that the rule is already in the OMB’s hands means it’s most likely to avoid an entanglement with the Congressional Review Act. In fact, the act may very well be the reason the rule was submitted for review much earlier than originally anticipated.

In a nutshell, the act allows Congress to disapprove “major” final rules promulgated by federal agencies — like the DOL. But the disapproval can be shot down by a presidential veto — meaning the FLSA changes were highly unlikely to be challenged during President Obama’s tenure.

However, the act states that if a major rule is is submitted to Congress with fewer than 60 session days remaining on the legislative calendar, then the next Congress will have a similar 60-day period to consider the rule. And according to recent calculations by the Congressional Research Service, if the DOL’s overtime rule isn’t released by the OMB by May 16, the rule will be at the mercy of the next Congress and president.

Bottom line: The best chance the Obama administration — and the current DOL regime — have of making the FLSA-altering overtime rule stick was to get it on the books before May 16, a deadline they’re now well on their way to beating.

When will it take effect?

Despite some back-and-forth about when it was going to submit the rule to the OMB, the DOL has remained steadfast about one thing: The rules were likely to take effect 60 days after being published, and that still appears to be the plan.

As a result, employers can expect to have to be in compliance with the rule this summer — most likely by the end of July (but possibly sooner).

Still, there’s no way to know exactly what’s in the rule until it is approved by the OMB. But chances are the rule won’t be too far off from what employers saw in the proposed rule.

Here’s a rundown of what was proposed:

  • Drastically increasing the FLSA’s salary threshold. As you know, the current minimum salary a worker has to be paid to be exempt from overtime is $455 per week or $23,660 per year. Well, under the proposed rule, it would jump to $970 a week or $50,440 per year. The DOL calculated that $50,440 would equal the 40% percentile of weekly earnings for full-time salaried workers.
  • The highly compensated employee threshold will also climb. The total annual compensation requirement needed to exempt highly compensated employees would climb to $122,148 from 100,000 — or the 90th percentile of salaried workers’ weekly earnings.
  • The salary thresholds will automatically increase. For the first time ever, the salary thresholds would be tied to an automatic-escalator. The DOL is proposed using one of two different methodologies to do this — either keeping the levels chained to the 40th and 90th percentiles of earnings, or adjusting the amounts based on changes in inflation by tying them to the Consumer Price Index.
  • No changes to the duties tests have been proposed. The DOL didn’t suggest changing the executive, administrative, professional, computer or outside sales duties tests as of yet. However, the agency sought comments on whether they should be changed and whether they’re working to screen out employees who are not bona fide white-collar exempt employees. Early indicators were that the DOL would look to adopt a California-style rule in which employees would be required to spend more than 50% of their time performing exempt duties to be classified as exempt.
  • Discretionary bonuses wouldn’t count toward salary threshold. In the proposed rule, discretionary weren’t part of a person’s salary calculation — but that could change depending on the comments the agency received. Currently, such bonuses are only included in calculating total compensation under the highly compensated employee test. But the DOL said some stakeholders are asking for broader inclusion of bonuses in salary calculations.

The DOL received more than 250,000 comments on the proposed rule.

Stay tuned. HR Morning will have a full breakdown of the final rule once it’s published — along with rundown of what you’ll need to do to get in compliance.

Favoring one minority over another will still get you sued for discrimination

A Texas company will pay over $1 million to learn a lesson in the dynamics of hiring discrimination: You can’t avoid a bias lawsuit from one minority group by favoring another.  

Lawler Foods, Inc. and Lawler Foods, Ltd.  will pay $1,042,000 as part of the settlement of a class race and national origin discrimination lawsuit brought by the U.S. Equal Employment Opportunity Commission.

The EEOC claimed that Lawler, a baked goods company, discriminated against three applicants and a class of African-American and non-Hispanic applicants by failing to hire them into entry-level jobs at Lawler’s Humble, TX-area facility because of their race.

In its lawsuit, EEOC alleged that Lawler had violated Title VII by intentionally failing to hire black and other non-Hispanic applicants for jobs — and by using hiring practices, including word-of-mouth recruiting and advertising a Spanish-language preference that had an adverse disparate impact on black and other non-Hispanic applicants.

The EEOC filed the lawsuit in December, 2014 in U.S. District Court for the Southern District of Texas after first attempting to reach a pre-litigation settlement.

In addition to the monetary claims fund, the four-year consent decree resolving the lawsuit requires Lawler to:

  • seek to recruit and hire black and other non-Hispanic job applicants for its production jobs;
  • conduct an extensive self-assessment of its hiring to ensure non-discrimination and compliance with the terms of the consent decree;
  • conduct employee training to further its non-discrimination commitment; and
  • designate an internal leader to prioritize compliance with the requirements of the consent decree.

The case is the latest example of the EEOC following a priority identified in its Strategic Enforcement Plan: eliminating barriers in recruitment and hiring, particularly class-based intentional recruitment and hiring practices that discriminate against disabilities. The case was handled by EEOC’s Houston District Office, which oversees Southeast Texas, and the New Orleans Field Office, which covers the State of Louisiana.