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Is Your Business Ready: New DOL Compensation Rules

If your business has ‘exempt’ employees there are significant changes effective 12/1/2016 that will have an estimated $1.2 Billion effect on U.S. businesses.

As an employer you should review and update both your employee manual and employee pay procedures after discussing these changes with your Human Resources or legal professionals. Failure to update your procedures and documentation could open you up to significant costs as you pay fines, legal fees and unexpected overtime wages.

Jackson Lewis P.C., a law firm specializing in employment law has developed a very informative recorded webinar.

Some key features of the Department of Labor’s (DOL) changes to the Fair Labor Standards Act (FLSA) include:

  1. Minimum salary levels for exempt employees more than doubles from $23,660 to $47,476.  Duties test still applies.
  2. Highly compensated exemption salary threshold increases from $100,000 to $134,004.  Duties test still applies.
  3. The minimum salary levels above will automatically change every 3 years going forward.
  4. Bonuses and incentive compensation may now be used to satisfy up to 10% of the minimum salary for exempt employees.
  5. The outside sales and professional exemptions appear to remain unchanged.
  6. Non-profit organizations are still subject to the act but there has been significant clarification as to how the act applies to employees of non-profit organizations.

Some potential fixes to those with exempt employees that will no longer qualify after 12/1/2016 include:

  • Convert salaried employee to hourly.  How will your employees respond to not having a guaranteed salary each week?
  • Work with your attorney, accountant or human resources professional to determine how to pay overtime when necessary to your salaried workers.
  • Increase salary and keep the employees exempt but consider how those employees just above those you increase will respond…will they want raises as well?
  • Hire additional workers to reduce the necessity of paying overtime.

Note that Offering Comp Time to employees that work more than 40 hours per week in lieu of overtime appears to be forbidden by the act.

Before concluding this article I’d like to leave you with a few additional thoughts:

  • Remember that for many of your employees the ‘can I leave early for a family event and make up the hours next week’ question will soon carry a cost…overtime wages.
  • If you need to start tracking hours for employees, how will you do so?  Time clock, track access through electronic means (telecommuters), self report…
  • If your employee manual doesn’t address requesting permission ahead of time to work more than 40 hours then it may be time to institute this rule.  Otherwise you’re essentially writing blank checks to your employees.
  • Change can be upsetting, especially for security driven employees who are used to getting the same amount in their paycheck each month.  Make sure to communicate with your employees not only about the pay and procedural changes but also why they are necessary.
  • While Employment Practices Liability Insurance can protect you from most employment related financial liability losses I would not anticipate any coverage for failure to comply with the FLSA.

Finally, there is a significant potential for additional labor costs…to the tune of over $1.2B per year for U.S. employers, so make sure that you spend the time necessary to assure compliance.


Uber Trouble By Giving a Lyft

UberDon’t get yourself in Uber trouble by giving a Lyft for pay.  Ridesharing companies are an emerging opportunity for folks with a drivers license and a car to make a few extra dollars but carefully review the potential risks and rewards before signing yourself up as a driver or even a passenger for a ridesharing firm like Uber, Sidecar or Lyft.  Transportation network companies like these use smartphone communications technology to connect individuals who want a ride with drivers who are willing to give a lift for a fee. In addition to violating livery (taxi) licensing laws in many jurisdictions these drivers generally use their personal vehicles and intend to rely on their personal auto policies which invariably have livery and/or business exclusions written into the policy language.

Essentially this means that most Uber, Sidecar and Lyft drivers are operating without insurance protections and are gambling all their assets and all their future wages on whether or not they are involved in an accident.  Remember that an auto policy is intended to protect you not only from accidents that are your fault, but also from accidents that are the other guy’s fault when she/he is unknown (hit & run) or  unable (due to no or low insurance liability limits and limited assets to sieze) to pay for the injuries and property damage consequences.  The financial losses from auto accidents can easily exceed $100,000 or even $1,000,000 for serious accidents.

Our recommendation is to stay out of Uber trouble by avoiding these Lyft companies as a passenger and a driver unless you/your driver has secured adequate commercial livery insurance to cover such risks.

Yennie & Jones Represents Top P&C Companies

Yennie & Jones Insurance is pleased to offer protection from the  the following Wards Top 50 Property & Casualty Insurance Company Selectees:

  • American Modern Insurance Group
  • Auto-Owners Insurance Group*
  • Chubb Group
  • Philadelphia Insurance Companies
  • Progressive Casualty Insurance Company
  • RLI Insurance Group*
  • Safety Insurance Group
  • Travelers Insurance Group
  • W.R. Berkley Corporation Group

Note: The companies listed above rank as the top performing property-casualty companies based on the Ward Group annual analysis of the insurance industry. They each have passed all safety and consistency screens and have achieved superior performance over the five years analyzed (2004-2008). Companies are listed alphabetically. An important objective is to benchmark their performance as a group with the rest of the property-casualty insurance industry. The Ward’s 50 list and comparisons based on benchmarks set by Ward’s 50 companies are available in Ward’s Results®, an insurance industry financial reference series.

* 19-year recipient, 1991-2009.

Expansion of the Familiy Medical Leave Act (FMLA)

Expanded Leave Benefits for Servicemember

On January 28, 2008, President Bush signed into law H.R. 4986, the National Defense Authorization Act of 2008.  Although human resources and employee benefits professionals can usually ignore most military spending legislation, this one definitively has an impact on employers.  Tucked into this law is a provision that expands the Family and Medical Leave Act (FMLA) for the first time since the law was enacted in 1993.

Two New Categories of FMLA Leave

H.R. 4986 creates two new categories of FMLA leave.  Employees taking leaves under these provisions are entitled to the same job protection benefits and continuation of health coverage as those taking other FMLA leaves.

  • Servicemember Family Leave gives an eligible employee who is the spouse, child, parent or next of kin of a “covered servicemember” up to 26 work weeks of unpaid leave in a 12-moth period to care for that covered servicemember.  This is more than double the time the FMLA grants to family members of non-servicemembers.  A “covered servicemember” is a member of the Armed Forces (including the National Guard or Reserves) who is undergoing medical treatment, recuperation, or therapy, is otherwise in an outpatient status, or is otherwise on the temporary disability retired list, for a serious injury or illness incurred in the line of duty.  Although the new law does not contain an effective date, the Department of Labor (DOL) provided clarification on its website that this provision is effective as of January 28, 2008.
  • Leave Due to Active Duty of Family Member. The bill allows the spouse, parent or child of an active duty servicemember who is taking part in a “contingency operation” to take 12 workweeks of unpaid leave because of any “qualifying exigency.”  A “contingency operation” is defined as a military operation (i) against an enemy of the United States or against an opposing military force, or (ii) that results in the call or order to, or retention, of active duty of members of the uniformed services during a war of during a national emergency declared by the President or Congress.  This definition is broad enough under present circumstances to cover almost every active duty service member.  A “qualifying exigency” is not defined in the bill, which specifies that the Secretary of Labor shall define it in regulations.  The DOL’s website state that this provision will not be effective until the Secretary or Labor issues final regulations defining “any qualifying exigency.”  In the interim, the DOL encourages, but the law does not require, employers to provide this type of leave.

Combined Leaves

The law limits an eligible employee to a combined total of 26 weeks of leave in a given 12-month period for a combination of Servicemember Family Leave and any other type of FMLA leave.  For example, an employee might take 12 weeks of “qualifying exigency” leave when her reservist spouse is notified that he is being called to active duty in Iraq.  If three months later the spouse is seriously injured, the employee would only have 14 weeks of leave available to care for her injured husband.   Or, an employee might take 10 weeks of FMLA time after the birth of her child.  If two months later, her covered servicemember spouse were seriously injured, she would only be eligible for an additional 16 weeks of leave to care for him.

Provisions that Mirror Existing FMLA Rules

  • Intermittent Leave – These new types of leave may be taken in blocks, intermittently or on reduced schedules, as with current FMLA leaves.
  • Substitution of Paid Leave – An eligible employee can elect, or an employer can require the employee to use accrued paid vacation, personal leave, family leave, medical or sick leave for any part of the leave provided under these new provisions.
  • Limited Leave for Spouses at the Same Employer – Two spouses employed by the same employer may be limited to the maximum number of weeks that one person would be entitled to (12 or 26 weeks, depending upon the type or leave).

Definition of “Serious Injury or Illness”

The new provisions define “serious injury or illness” as “an injury or illness incurred by the member in the line of duty in the Armed Forces that may render the member medically unfit to perform the duties of the member’s office, grade, rank or rating.”

This is different from the definition of a “serious health condition,” the trigger for the other categories of FMLA leave.  A “serious health condition” under the FMLA is generally an illness, injury, impairment or physical or mental condition that involves either inpatient care or continuing treatment by a health provider.  While this may turn out to be a distinction without a difference, the discrepancy between the two definitions could lead to different standards for a leave taken to care for a servicemember family member than for a non-servicemember family member.  This would create administrative difficulties for employers trying to determine whether specific employees are qualified to take FMLA leave.

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