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This Month’s Topics:
- IS FINAL SALARY LEVEL FINAL?
- By Management Rights They Mean Management Rights
- Overtime Pay Required After 48-Hour Workweek
- ADMINISTRATIVE LEAVE CAN BE ADVERSE EMPLOYMENT ACTION
- Tip Of The Month
Is Final Salary Level Final?
Several weeks ago the U.S. Department of Labor issued its final rule raising the salary threshold to qualify for the executive, administrative and professional exemption to $35,568/per year or $684/per week. Employees making more than that amount and within one of the statutory exemption classifications are exempt from the overtime rules. It is intended that these new levels be implemented as of January 1, 2020. However, there is significant uncertainty as to whether this in fact will happen. The Fifth Circuit Court of Appeals has retained jurisdiction, in a case where a Federal District Court in Texas granted summary judgment against the Department of Labor ruling it did not have a power to set salary levels. It is almost certain that some parties will raise this issue and possibly the implementation of the new rule will be stayed. Notwithstanding this uncertainty, employers should prepare themselves to implement any changes in salary and verify procedures to make sure that previously exempt employees below the salary thresholds report and are paid in the manner that provides them with overtime when appropriate.
The final rules also increase the highly compensated employee exemption from $100,000 to $107,432. This is significantly less than the number set by the Obama Administration, which proposed $147,000. Highly compensated employees who perform managerial duties are subject to less stringent requirements to be exempt from overtime. As expected, the final rules make no change in the duty requirements, nor do they include any automatic inflation adjustment to the salary level.
By Management Rights They Mean Management Rights
In a case involving a Las Vegas bus operation, the National Relations Labor Board (NLRB) in a 3:1 ruling rejected the so-called “clear and unmistakable waiver” standard (basically requiring a contract provision that unequivocally and sporadically referred to the type of act at issue) for analyzing whether an employer’s change to the terms of employment were squarely within its management rights. The NLRB substituted and retroactively applied a “contract coverage” or “covered by the contract” standard in determining whether the unilateral changes to practices and policies should be recognized as allowed, primarily under the management right clauses. The Management Rights Provision in this case was fairly standard: “Except to the extent expressly abridged by a provision in this agreement, the company reserves and retains, solely and exclusively, all its rights to manage the business. Among those rights, and by no means a wholly inclusive list, is the right to determine staffing size, to decide and sign all schedules, work hours, work shifts, machines, tools, equipment and property to be used to increase sufficiency, to hire, to promote, assign, transfer, demote, discipline and discharge for just cause; and to adopt and enforce reasonable work rules.”
The NLRB specifically defended its policy as consistent with Supreme Court precedent and decisions of the DC Circuit and the First and Seventh Circuit Courts. The NLRB noted that the prior and unmistakable waiver standard cannot be separated from the deep-seated hostility to management rights language. At issue were revisions to work rules and policies, such as safety rules, drive-cam policy and bereavement leave and pay, among other matters. Under the “covered by the contract” standard for conducting such analysis, the NLRB relied on the language in the Collective Bargaining Agreement (CBA) to see if any disputed change by the employer fell under management authority to make changes unilaterally. If the employer acts outside the bounds of the CBA’s management rights language, then the NLRB will find the employer did violate the NLRA in most instances. For example two referenced policies were changed to add such terms as “non- probationary” and “full-time” employees. These changes were considered added and found to be outside the contract language and not within management rights. M.V. Transportation, Inc., Case No. 28-CA-173726 368 N.L.R.B. No. 66 (2019).
Overtime Pay Required After 48-Hour Workweek
For jobs excluded or exempt from the federal Fair Labor Standards Act, the Minnesota Fair Labor Standards Act (Minn. Stat. §§ 177.21-.35) requires employers to pay overtime (at least time-and-a-half) to employees working more than 48 hours per week. The state statute does not explain how those 48 workweek hours are calculated. The Minnesota Supreme Court recently addressed this issue in In re Minnesota Living Assistance, Inc., where employer paid its employees based on a “split-day” compensation plan— a standard hourly rate for the first 5.5 hours of a shift and 1.5 times that hourly rate for the next 10.5 hours of a shift—but did not pay its employees overtime after working more than 48 hours per week. No. A17-1821 (Minn. September 18, 2019). The Court had to determine which hours of employment require time-and-a-half compensation under Minn. Stat. § 177.25, subd. 1, and whether such “split-day” compensation plans are allowed. The Court determined employer’s wage payments violated the statute, regardless of how the employee was compensated during the 48-hour workweek. Consequently, such “split-day” plans which fail to pay an employee at least 1.5 times the employee’s regular rate for hours worked after the first 48 hours per week violates the Minnesota Fair Labor Standards Act. Such split-day plans also violate § 7(a) of the federal FLSA. See Walling v. Helmerich & Payne, Inc., 323 U.S. 37 (1944).
ADMINISTRATIVE LEAVE CAN BE ADVERSE EMPLOYMENT ACTION
Patrol Sergeant Steven Moore, whose duties included supervising other patrol officers, filed a union grievance because he and other officers were not paid overtime for attending a mandatory training outside of normal working hours. Several weeks later, the police department launched two investigations into Moore’s past behavior on the job, including improperly approving an officer’s unscheduled work hours and whether he had fraudulently called in sick. During the investigation, Moore was placed on paid administrative leave. Two months later, the city ruled against Moore on the unscheduled time approval and ordered him to serve a five-day unpaid suspension. But the city never informed Moore that the investigation was complete. Rather, he remained on administrative leave for an additional seven months. When Moore returned to work, he was assigned a desk job. Over a year later, Moore received a disciplinary warning for insubordination. Moore then sued the city under Minnesota’s whistleblower statute. The District Court dismissed the case without a trial, and Moore appealed. The city argued that administrative leave is not a penalty under the law, but the Court of Appeals disagreed. It reasoned that “[t]he undisputed facts and the disputed facts construed in Moore’s favor could support a finding that the city treated Moore in a manner that penalized him and would dissuade a reasonable employee from engaging in conduct protected by the Minnesota Whistleblower Act,” and that being forced to remain on administrative leave for seven months after the investigation concluded satisfied Moore’s initial burden of establishing an adverse action under the whistleblower statute. Moore v. City of New Brighton, 932 N.W.2d 317 (Minn. App. 2019).
TIP OF THE MONTH:
Employers should train management and direct supervisors to properly classify and handle family and medical leave requests. For employers subject to the FMLA, or who adopt leave rules consistent with FMLA, an employee need not explicitly use the terms “family and medical” or “FMLA” when requesting leave that falls within the Act’s purview. Employees must give a basic explanation for the need for requested leave. If the information provided puts the employer on notice that such leave would qualify for FMLA leave, the employer should treat the leave accordingly.
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.
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Copyright 2019 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.