Friday, June 19, 2015


New FLSA Regulations. Recently, we alerted you to the fact that new regulations governing the “white collar” overtime exemptions under the federal Fair Labor Standards Act (FLSA) have been submitted for final review and approval to the Office of Management and Budget by the U.S. Department of Labor.  As we noted, the effect of the new regulations will be to increase the minimum weekly salary that an employee must receive in order to qualify for exempt status.  In addition, it is expected that there will be changes in the “duties” test to make it more difficult for employees who are now classified as exempt but who regularly perform non-exempt work to retain exempt status. The new regulations are expected to be released any time now.

Releases and the FLSA.  In the case of Bodle v. TXL Mortgage Corp., No. 14-20224 (June 1, 2015), the United States Court of Appeals for the Fifth Circuit held that a broadly-worded release executed in connection with a noncompetition agreement did not bar the employee who signed the release from pursuing claims for unpaid overtime.  The court essentially found that there was no factual development that would allow the court to conclude that the release intended to cover unpaid overtime.  This case underscores the need for legal advice in the drafting of carefully worded releases in employee settlement agreements.

Definition of “Independent Contractor”.  The Administrator of the Department of Labor’s Wage and Hour Division has disclosed that he will issue an “Administrator’s Interpretation” to clarify the definition of “independent contractor” under the FLSA.  While the precise timing of the release is unknown, it is expected that the definition will expand the “economic realities” test to make it more difficult for employers to avoid obligations applying to employees by classifying workers as independent contractors.  The Interpretation is expected to impact not only individuals traditionally classified as independent contractors but also those now classified as franchisees and volunteers.

Employee Use of Smart Phones. In August, 2015, the Department of Labor plans to publish a request for information on employee use of smart phones.  This is in line with questions that have been raised as to whether employees who use smart phones to conduct the employer’s business outside of normal working hours are performing compensable work and thus may be eligible for overtime pay for those activities.  This inquiry impacts not only on possible FLSA liability but also on the employer’s record-keeping obligations, especially in circumstances in which those obligations conflict with an employee’s privacy rights.   

Minimum Wage Laws. Political pressure to increase federal and state minimum wage laws continues to be exerted.  The current federal minimum wage is $7.25 per hour; in Illinois, the minimum wage is $8.25 per hour.  The recently issued “President’s Plan to Reward Work by Raising the Minimum Wage proposes to increase the federal minimum wage to $9.00 per hour in stages by the end of 2015 and to index it to inflation thereafter.  In the meantime, states and cities have acted on their own to increase the minimum wage in their jurisdictions.  The minimum wage in the District of Columbia is $9.50 per hour, increasing to $10.50 per hour on July 1, 2015 and to $11.50 in 2016.  The minimum wage California and Massachusetts is $9.00 per hour, increasing to $10.00 per hour as of January 1, 2015.  In Washington state, the minimum wage is $9.47 per hour, while Oregon’s minimum wage is $9.25.

Locally-applicable minimum wages are as follows:  San Francisco -- $15 in 2018; Seattle -- $15 (2018-2021); Los Angeles -- $15.37 (hotels) (2015-2016); Oakland, CA -- $12.25 in 2015; and Chicago -- $13.00 in 2019.

Interns and Fair Employment Laws. Traditionally, interns are not regarded as employees and thus are not covered by federal and state fair employment discrimination and anti-harassment laws.  That is now beginning to change.  Illinois and New York City amended its Human Rights Law this year to add protections covering both paid and unpaid interns in certain circumstances.  This follows the July, 2014 amendment to the New York State Human Rights Law that expanded the law to cover unpaid interns.