September 2020 – Vol. 22, No. 9

The Employer E-Letter:  Labor and Employment Law News
from the Duluth, Minnesota law firm of
Hanft Fride, A Professional Association.

Co-Editors, Scott A. Witty, saw@hanftlaw.com and Richard R. Burns, rrb@hanftlaw.com, or 218.722.4766. Please feel free to forward this e-mail or share it with others.  If there are other topics of interest to you or any other suggestions concerning this newsletter, please let us know.

This Month’s Topics:

  • THE LOST WAGES ASSISTANCE PROGRAM FOLLOWS THE CARES ACT WITH $300 PER WEEK IN SUPPLEMENTAL UNEMPLOYMENT BENEFITS
  • WORK FROM HOME GUIDANCE
  • FLUCTUATING WORKWEEK OVERTIME RULE
  • The Supreme Court Continues to Require Strict Tests for Bias Suits
  • Tip Of The Month

THE LOST WAGES ASSISTANCE PROGRAM FOLLOWS THE CARES ACT WITH $300 PER WEEK IN SUPPLEMENTAL UNEMPLOYMENT BENEFITS

On August 8, 2020, President Trump through executive action authorized the creation of the Lost Wages Assistance (“LWA”) Program to provide unemployed workers with additional assistance in order to address the fallout of the COVID-19 pandemic. This new program partially replaces the $600 per week in supplemental benefits that unemployed workers had been receiving under the Coronavirus Aid, Relief and Economic Security (“CARES”) Act, which expired on July 31, 2020. Under the LWA Program, eligible claimants may receive between $300 and $400 per week, depending on the state. Most states, including Minnesota, have adopted the $300 per week supplemental benefit option. The LWA Program is set to provide supplemental assistance from August 1, 2020 through December 27, 2020, but the program could be revisited before then because it was created as a result of the legislative impasse that has gripped Congress. Therefore, it is important to keep abreast of new developments because this program could ultimately be terminated or replaced.

WORK FROM HOME GUIDANCE

Under Fair Labor Standards Act (FLSA), employers must compensate employees for all “hours worked,” which includes any time an employer knows or has reason to believe that work is being performed. Employers must pay employees for “hours worked, including work not requested but allowed, even if the hours are unauthorized. This requirement applies to all remote and telework employees. In response to the increased number of employees working remotely due to the Coronavirus pandemic, the Wage and Hour Division of the Department of Labor (DOL) in August 2020 published guidance to clarify employers’ obligation to track compensable work hours for telework employees. The DOL guidance restates the FLSA requirement—If the employer knows or has reason to believe that an employee is performing work, the time must be counted as hours worked—and  applies a “reasonable diligence” standard to determine whether employer has reason to believe work is being performed. The guidance also encourages employers to set up a process for employees to report uncompensated work time noting that once a reporting mechanism is in place, it is employees’ responsibility to report uncompensated time using the process available.  The DOL guidance can be found at https://www.dol.gov/sites/dolgov/files/WHD/legacy/files/fab_2020_5.pdf.

FLUCTUATING WORKWEEK OVERTIME RULE

The Fair Labor Standards Act (FLSA) requires employers to pay their nonexempt employees overtime pay of 1.5 times the regular rate for every hour over 40 an employee works in a workweek.  The fluctuating workweek overtime rule is a method of calculating overtime pay under the FLSA for employees with a fixed salary and fluctuating hours.  Under this rule, employers may calculate overtime pay for salaried employees with fluctuating hours as follows: 1) Determine base hourly rate by taking  fixed weekly salary divided by numbers of hours the employee actually worked in the week; and 2) base rate times 0.5 for each hour worked beyond 40 hours in the work week. Previously the U.S. Department of Labor’s (DOL) enforcement position was that employers could not use the fluctuating workweek method to calculate overtime pay if overtime pay exceeded the employee’s guaranteed salary, and was unclear regarding what constitutes a “fluctuating workweek”.

In May 2020, the DOL announced a final rule on fluctuating workweek overtime. The final rule clarifies that payments in addition to fixed salaries are compatible with the fluctuating workweek method of compensation, and such payments must be included in the calculation of the regular rate as appropriate under the FLSA.

In an opinion letter issued in August, the Wage and Hour Division of the U.S. Department of Labor determined that the fluctuating work week rule does not require that hours in a week fluctuate above and below 40 hours per week.  In summary, the opinion sets out the five criteria as follows:  (1) employee’s hours of work fluctuate from week to week; (2) employee receives a fixed salary that does not vary with the number of hours worked; (3) the amount of the fixed salary meets the applicable minimum wage rate whatever hours are worked; (4) employer and employee have a clear and mutual understanding that the fixed salary is compensation for all hours, excluding any overtime premium, bonuses, commissions or other special payments; (5) employee receives in addition to the fixed salary, including non-discretionary bonuses, commissions and additional payments of any kind, compensation for all overtime hours worked at a rate not less than one-half time the employee’s regular rate of pay.  It was stated that this opinion that the hours did not have to fluctuate above and below 40 hours was simply a reaffirmation of prior interpretation.  U.S. Dept. of Labor, Wage and Hour Division, FLSA 2020-14 (August 31, 2020).  Employers should review their pay practices for compliance in light of the Department of Labor’s Advisory Opinion. 

The Supreme Court Continues to Require Strict Tests for Bias Suits

In a case involving Comcast and a black media owner, Byron Allen, the Supreme Court determined in a largely unanimous decision that the “but for” test to evaluate allegations of racial bias under Section 1981 of a Civil Rights Act applies.  Among other prohibitions, Section 1981 bars discrimination in contracting, and the claim here was that race discrimination was a reason that Comcast did not carry his stations on its cable systems.  In 2009, the Supreme Court ruled in Gross v. FEL Financial Services that the “but for” standard applied for Age Discrimination in Employment Act lawsuits, so this decision was not a surprise, however, it was a reversal of the 9th Circuit Court of Appeals’ decision.  The 9th Circuit used the less stringent standard that racial discrimination must only play “some role” in allowing this bias case to move forward.  Justice Ginsburg noted separately that she had long held that “a strict but-for causation standard is ill-suited to discrimination cases and is inconsistent with tort principles.”  She did, however, recognize that “our precedent now establishes this form of causation as a ‘default rule[e]’ in the present context.”  The 9th Circuit will now be required to review the allegations by Entertainment Studios under the stricter “but for” standard.  Comcast Corp. v. National Association of American-Owned Media, et al, U.S. Supreme Court, Case No. 18-1171 (2020).

TIP OF THE MONTH: 

While some companies have had some or all employees return to the workplace, others continue to have employees working remotely due to safety concerns arising from COVID-19 and related state mandates.  Conditions continue to change, but it has been months now since the state shutdown.  Employers should now be settled with their preparedness plans, and with whatever degree of calm or “new normalcy” we are experiencing, it may be an appropriate time to review and revise job descriptions and workplace policies.  This is particularly true for employers with remote workers and those that are looking to recruit and hire new employees.  Accurate and up to date job descriptions are important for multiple reasons, not the least of which is to prevent and/or properly respond to discrimination claims. 

Hanft Fride’s business and trial lawyers are located at 1000 U.S. Bank Place, in Duluth, Minnesota.  Visit our website at www.hanftlaw.com for general information on the firm and our attorneys. Our employment lawyers include Tom Torgerson, Rob Merritt and Scott Witty.  Richard Burns is now of Counsel.

The information provided in this E-letter is general in nature and should not be used as a substitute for professional services and advice.  The communication and receipt of this information is not intended to create an attorney-client relationship.  Readers should consult with their legal counsel before taking any action on matters covered in this E‑letter.

To subscribe or unsubscribe to Employer E-Letter, e-mail your request to jaw@hanftlaw.com or call Scott Witty at 218.722.4766. Copyright 2020 by Hanft Fride, P.A.  All rights reserved.  Hanft Fride, A Professional Association, 1000 U.S. Bank Place, 130 W. Superior Street, Duluth, MN 55802.  Phone 218.722.4766; Fax 218.529.2401.