by Jennifer Shorb Hagerman
After several years of uncertainty, in September 2019 the U.S. Department of Labor issued its final rule on the minimum amount an employee must earn per week in order to be considered for most of the “white collar” exemptions from overtime under the Fair Labor Standards Act. The white collar exemptions include the professional, administrative and executive exemptions.
The new threshold is $684 a week, or $35,568 per year, up from the previous threshold of $455 a week, or $23,660 per year, set in 2004. The new threshold is significantly lower than the $913 a week, or $47,476 per year, proposed by the Obama administration. As a reminder, in order to qualify for the white collar exemptions, an employee must be paid on a salary basis (not hourly), meet the new salary threshold, and perform certain duties as set forth in the specific exemption or exemptions. The duties tests are not being altered by the new final rule.
In addition to the new final rule on the salary threshold, the DOL also issued a final rule raising the total annual compensation level for “highly compensated employees (HCE)” to $107,432 per year and allowing employers to use nondiscretionary bonuses and incentive payments (including commissions) that are paid at least annually to satisfy up to 10 percent of the standard salary level, in recognition of evolving pay practices.
The new final rules are scheduled to take effect on January 1, 2020. There is a strong likelihood that there will be efforts to block the new rules. According to the DOL, it is getting “ready to defend them,” but says it is confident about the final rules.
The DOL estimates that 1.2 million additional workers will be entitled to minimum wage and overtime pay as a result of the increase in the standard salary level and that approximately 100,000 additional workers will be entitled to minimum wage and overtime pay as a result of the increased HCE level.
We’ll be watching the implementation of these rules, and are available to help you with any compensation issues that might arise. Please don’t hesitate to call us.
by Lisa A. Krupicka
As we know, there is no law in Tennessee, state or federal, requiring employers to provide paid leave to their employees outside of worker’s compensation benefits. Nevertheless, it is a rare workplace that does not provide some form of paid leave to its employees, such as sick leave, vacation, short term disability (“STD”) and long term disability (“LTD”). This column will discuss how paid leave programs can complicate employment decisions.
Amy works for Girdles Are Us (like Spanx but less cool) in its information technology epartment. She is one of the programmers/designers of GRU’s computer program that runs its manufacturing process, which is praised as “providing a perfect fit for every body shape.” While working in her yard one weekend, she trips over a garden hose and falls heavily on her right shoulder, dislocating it, breaking her shoulder blade and tearing various ligaments around her shoulder socket. At the hospital, the attending physician tells her that she will need to have surgery to repair the ligament damage and to place pins in her shoulder to stabilize the break. She should expect to completely lose the use of her right arm for four to six months, with another four months of limited use while she undergoes physical therapy.
Girdles Are Us has a generous paid leave policy. Amy can use vacation or sick leave for the first two weeks and then can apply for short term disability, which will pay her 100% of her pay for a maximum of six months. After six months, Amy can apply for long term disability if she needs it, which will pay her 2/3 of her pay for as long as she is totally disabled or when she reaches the age of 65, whichever comes first. Amy is also entitled to FMLA leave for up to 12weeks.
Not surprisingly, Amy is not even close to being able to return to work at the time her FMLA leave expires. Now GRU must determine whether it can accommodate her continued absence for up to another seven months. Because Amy’s work requires her to type on her computer and talk on the phone, her inability to use her right arm would be hard to accommodate. While she can use a headset or Bluetooth, she can’t use both hands to type. Moreover, her job frequently requires her to examine the machinery on the factory floor, which requires climbing both on and under the machines.
So Amy must remain on leave. Because her job is highly specialized and involves an intimate understanding of GRU’s intellectual property and trade secrets, bringing in a temp will not be of much help. Her work must therefore be divided among the existing employees in her department.
After about two more months, Amy’s absence has really begun to show. Upgrades and repairs to the system are slow and frequently hit-and-miss. Her department is demoralized and cranky. Amy’s doctor says she has made amazing progress, but likely will not be able to return to work for at least another three months. The CEO demands that HR post Amy’s position and begin looking for a replacement.
What about the ADA? Has GRU fulfilled its duty to accommodate Amy’s disability? Certainly it can be argued that a total of seven months off the job is an undue hardship where the position is highly specialized and can’t be easily done by a temp or by loading the job’s duties onto other employees. But what about the company’s generous STD/LTD program? Why would an employer offer this benefit to employees and then penalize them for using it? Isn’t the company, in effect, admitting that a minimum of six months is a reasonable accommodation? On the other hand, even if such a lengthy absence does create a hardship, shouldn’t an employer want to go the extra mile for Amy, whose skills are not easily replaced, by providing the protection of such generous benefits?
I don’t have the answer but employers should at least ask themselves the question. Call us if you’d like help thinking through what your approach to paid leave should be.
Congratulations to BPJ Member Tannera George Gibson, who has been elected Secretary/Treasurer of the Memphis Bar Association. With her election, Tannera will become President in 2022, the first black woman to hold the job.
Tannera is a native Memphian with extensive employment law experience. She has been named in Best Lawyers for her work in employment law on the management side, and was recently named Best of the Bar by the Memphis Business Journal. Tannera has extensive trial experience as well as experience conducting investigations and presiding over administrative matters, and maintains a solid pro bono practice. She received both her undergraduate degree (in computer science) and law degree from the University of Memphis.
“Over the years, Tannera and I have worked on and tried a number of complicated cases,” said Les Jones, BPJ attorney and member. “She is one of the best lawyers I’ve ever had the privilege of working with, and she’ll do a phenomenal job as a leader of the Bar Association.”
“Tannera continues a long tradition of BPJ lawyers playing leadership roles in the Bar Association,” said Nathan Bicks, managing partner of the firm. “I know she will bring the same level of excellence and hard work to this endeavor that she displays working as an advocate for our clients. We are extremely proud of her.”