U.S. Labor Department Continues its Review of White Collar Overtime Pay Rules

As we approach the two-year mark since amended regulations for white collar overtime pay were set to go into effect under the Obama administration, the U.S. Department of Labor continues to collect information anew as part of its reevaluation of the rules under Donald Trump. Later in October, the Department will hold what’s it’s calling a “listening session” in Washington, D.C. It is seeking input on several questions, including:

  • What is the appropriate salary level (or range of salary levels) above which the overtime exemptions for bona fide executive, administrative, or professional employees may apply?
  • What benefits and costs to employees and employers might accompany an increased salary level?
  • Should the Department more regularly update the standard salary level and the total-annual-compensation level for highly compensated employees?

It’s unclear whether or when new white-collar regulations will take effect. Following a review process that lasted more than two years and included hundreds of thousands of public comments, the Department of Labor planned to implement new regulations on December 1, 2016. The changes would have required that, if white-collar workers were to be exempt from overtime pay requirements, they earn at least $913 per week, roughly $47,000 annually, rather than the $455/week the rules now require. Highly paid workers in this category would have become exempt only if they earned $134,000 per year, up from the current $100,000. And the Department would have added an automatic updating mechanism to address inflation.

The Department’s plans were altered just after the November 2016 election of Mr. Trump when a Texas court blocked implementation of the Department’s new regulations. The Trump administration accepted the decision without substantive challenge after the Obama administration defended it for a time. The Department began its current review about a year ago.

Lawsuits under the Revised Equal Pay Act are Out of the Gate Quickly

Well, that didn’t take long.

On the first business day that amendments to the Massachusetts Equal Pay Act were in effect, the first lawsuit was filed in Boston, according to published reports. It was brought by a female flutist in the Boston Symphony Orchestra who claims she was paid less than a male oboist, who also is part of the BSO’s woodwind section. According to the suit, the plaintiff has suffered wage discrimination for years because her work playing flute is comparable to her male counterpart’s work playing oboe. Regardless how the case turns out, it stands as yet another warning to employers who have yet to consider the effects that the revised Equal Pay Act will have on their businesses.

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The day that amendments to the Massachusetts Equal Pay Act went into effect, a female flutist in the Boston Symphony Orchestra brought forward a lawsuit.

The primary change to the Act, which has been around for decades, involves the comparison between male and female workers. That required showing was until now virtually impossible to make. The Equal Pay Act now makes it far easier for plaintiffs. The law as revised provides that employers may not discriminate in the payment of wages between men and women in “comparable” jobs – those that require substantially similar skill, effort and responsibility and are performed under similar conditions.

What this means is open to interpretation, leaving the courts to deal with pay discrimination claims one at a time and employers to worry about whether their practices pass muster. With steep potential damages and only a narrow set of viable excuses for unequal pay between the genders, employers need to consider avoidance options quickly. The law provides for a safe haven of sorts for companies that perform self-evaluations and make progress toward addressing illegal pay disparities before a suit is filed. While the conditions under which this makes sense are up for debate – it may not be a useful exercise for all companies – employers who fail to consider that option and others do so at their own peril.

Massachusetts Attorney General Issues Guidance to Help Employers Prepare for the Equal Pay Act

image credit: pixabay

image credit: pixabay

With just four months until a revised Massachusetts Equal Pay Act takes effect and unleashes what is likely to be a wave of pay discrimination lawsuits, the state’s Attorney General has issued guidance to help employers understand and implement the new law. The guidance describes key elements of the new statute, which takes effect on July 1, 2018, and provides ideas on how employers can protect themselves against pay discrimination claims by self-auditing their compensation practices and beginning to address any sex-based disparities that they may uncover.

The new Equal Pay Act re-writes a 1945 law that sought to address pay discrimination but failed to do so; on average, full-time working women in the Commonwealth earn about 84% of what men earn, and the gap may be larger for minority women. Most significantly, the Act will make unequal pay for “comparable” work illegal and will subject employers to damages in the form of double the amount of any lost pay, plus reimbursement of employee legal fees. Employers will not be permitted to address existing pay disparities by reducing the wages of higher paid employees. They will be barred from even asking prospective employees about their salary histories until after a job offer at a specified wage is made. Neither may employers prohibit employees from exchanging information about their wages.

“Comparable work” is both a critical and difficult issue for companies to understand, and the Act helps employers understand what it means. Since job titles will not be determinative and comparisons of skill, effort and responsibility will be – the Attorney General’s new Equal Pay Act guidance offers insight into conducting appropriate self-audits of pay practices. This tool can provide legal cover to employers, who can escape liability for existing pay disparities by identifying problems in their own work forces and making progress to resolve them. As a result, virtually all employers should consider a self-audit as they keep in mind that the Act makes pay disparities between genders illegal regardless whether they occur intentionally or not.

For some employers, a self-audit might be a relatively straight forward and simple process and way to avoid a pay discrimination lawsuit. Many employers, however, will quickly hit complexities in determining which jobs to compare to which and how, if at all, to consider the effects of several criteria the Equal Pay Act permits as bases for pay disparities. In these cases, help from a professional compensation specialist may be necessary. In all cases, employers should consider the ramifications of the revised Equal Pay Act in the coming weeks and be sure they understand how to both prepare for it, and to avoid a pay discrimination lawsuit.

Massachusetts High Court Clarifies that Sick Leave is not Wages

Though most employment lawyers never thought of accrued sick leave benefits as a wage, it took only one, armed with a big enough sick leave balance, to test the question in Massachusetts’ highest legal venue. To the surprise of few, the law left the Massachusetts Supreme Judicial Court in the same form lawyers and lower court judges have long interpreted it. While accrued sick leave remains a benefit that employers now need to provide under Massachusetts law, it is not a wage that must be paid to departing employees who have accrued it on the company’s books.

The case’s high stakes lend a clue as to why it went as far as it did. At issue was $46,755 in accrued sick leave under a plan at the Massachusetts Port Authority. Though the benefits were ultimately paid to the employee, the check was cut about a year after he retired due to an arbitration proceeding that ultimately went his way. Under the Massachusetts Wage Act, wages due to employees must be paid promptly at departure from employment. The Plaintiff pressed a theory that this provision of the law was broken by the late payment and that he was consequently entitled to three times the amount of  accrued sick pay owed, plus reimbursement for all legal fees he incurred to collect his pay.

The SJC would have none of it, however. It cited to the Act’s definition of the term “wages,” which includes holiday pay, vacation pay and earned commissions but does not mention sick leave benefits. The court then contrasted the purposes of sick and vacation leave policies, noting that only the latter could be used for any purpose. Sick leave generally is not wages as a result, the court concluded, and could not be considered a wage under Massport’s specific policy of paying out accrued, unused sick leave under some circumstances. Those conditions made sick time at Massport a “contingent bonus,” such that it like other bonuses is not a wage covered by the Wage Act.

The case is Mui v. Massachusetts Port Authority, decided January 29, 2018.

Hiking of Minimum Wage to $15/Hour Makes its Way toward the Ballot Box for November 2018

Dissatisfied with the recent increase of the Massachusetts minimum wage to $11/hour and its failed efforts to get the state legislature to move the hourly rate to $15, a coalition of community, religious and labor groups has submitted the issue for referendum vote. Assuming the question moves through the process to the November 2018 ballot, Massachusetts voters will decide whether to increase the hourly rate to $15, a move that surely won’t go over well with some business people.

Proponents of the hourly wage increase are unmoved. They believe $15/hour is necessary to allow low paid workers to afford basic necessities such as groceries, housing and heating. As it is, they say, full-time workers earning the current minimum of $11/hour make only about $22,000 per year. About a million Massachusetts workers will benefit if the rate increase is approved, they contend, and most are above the age of 20. They include nursing assistants, childcare providers, and teachers’ aides, the group says. Anticipating objections to the wage hike, the coalition points out that, despite the increase in the minimum wage from $8 to $11 in recent years, the Massachusetts economy continues to grow strongly.

If approved at the ballot box, the minimum wage will increase by $1/hour each year for four years, beginning in 2019. The measure will also increase the minimum tip wage from $3.75 to $9/hour during the same 4-year period. Under Massachusetts law, tipped employees may be paid less than minimum if their hourly rate plus the tips they receive are equal to or exceed the minimum hourly wage. On December 21, 2017, the Massachusetts secretary of state confirmed that enough signatures were submitted to support the ballot measure. The proposed wage increase now moves to the state legislature, which will have the option to approve it prior to any voting by the public. If that does not occur by May 2, 2018 or if the governor fails to sign a passed measure into law, proponents of the minimum wage increase will need to obtain another roughly 11,000 signatures from Massachusetts voters by July 4 to place the question on the 2018 ballot.