On January 19, 2017, Leonard Segal Was a Panelist During Minnesota CLE’s 2017 New Lawyer Experience Program

Once again, Leonard Segal served as a panelist for “Quick Answers to the Legal Questions that Friends, Relatives and Strangers Will Ask You at Cocktail Parties,” during Minnesota Continuing Legal Education’s 2017 New Lawyer Experience program.  This session, which took place on January 19, 2017, is always a highlight of the New Lawyer CLE program.

This year’s panel included experienced lawyers in the areas of employment and labor law (Lenny), estate planning, criminal law, immigration law and family law. For further information about the 2017 New Lawyer Experience, click here.

On January 10, 2017, Leonard Segal Served as a Panelist for a CLE on Law Firm Marketing

On January 10, 2017, Leonard Segal participated in a CLE webcast on law firm marketing.  “Marketing Effectively Within the Rules,” which was part of Minnesota Continuing Legal Education’s Law Practice Management Series, provided an opportunity for Lenny and the other panelists to give their thoughts and insight on how lawyers can best market their services in today’s market.

SeilerSchindel, PLLC is a Finalist for 2017 Best of St. Louis Park

SeilerSchindel, PLLC has been honored as a 2017 finalist for the best law firm in St. Louis Park!  After finishing as a runner-up in 2016, St. Louis Park Magazine announced the firm as a finalist for the second consecutive year.   View the complete list of finalists and cast your vote here.

SeilerSchindel, PLLC is a full service corporate, employment, and family law firm serving businesses and individuals in Minnesota, North Dakota and Wisconsin.

On November 28, 2016, Leonard Segal was on WCCO Radio Discussing the Injunction that Blocked Implementation of the New Overtime Rule

On November 28, 2016, Leonard Segal appeared on Jordana Green’s WCCO radio show to discuss the implications of the temporary injunction that was issued by a Texas Judge blocking implementation of the Department of Labor’s new overtime rule.

If you would like to listen to Lenny’s radio appearance, click here and search for “Lenny Segal.”  You also may read Lenny’s blog on this major development here.

Federal Court Stops Department of Labor’s New Overtime Rule in Its Tracks

NOTE: The following blog originally appeared on November 23, 2016.

For the most recent developments since that time, see the December 2016 Update at the end of the blog.

Stunning news coming out of Texas yesterday!  A federal Judge, who was appointed by President Obama, issued a nationwide preliminary injunction blocking the federal Department of Labor’s (DOL) new overtime rule that was scheduled to take effect on December 1, 2016.  Under the new rule, the minimum salary for executive, administrative and professional employees to be exempt from overtime pay requirements under the federal Fair Labor Standards Act (FLSA) would have increased to $913/week ($47,476/year) – more than double the current level.  Further information about the new rule – which has now been blocked – can be found here.  You can read the Court’s opinion here.

The development is a big blow to President Obama, who directed the DOL in 2014 to update the regulations defining which white collar employees are exempt from overtime pay.

 

Background

Before addressing why the court issued the injunction, let me start with a little background:

The FLSA requires, among other things, that employers who are covered by the FLSA pay overtime pay to employees who work more than 40 hours in a week.  The FLSA, however, includes various exemptions to the overtime pay requirements, including an exemption for employees who are “employed in a bona fide executive, administrative or professional capacity.”  29 U.S.C. §213(a)(1).  The FLSA itself does not define this so-called EAP exemption.  Instead, Congress delegated to the Secretary of Labor the power to define the EAP exemption, and the Secretary of Labor authorized the DOL to issue regulations interpreting the EAP exemption.

Under the existing regulations, an employee generally must meet three requirements to qualify for the EAP exemption: (1) He/she must be paid on a salary basis (“salary basis test”); (2) He/she must be paid at least the minimum salary set by the applicable DOL regulations (“salary level test”); and (3) He/she must perform EAP duties (“the duties test”).

The new rule addressed the salary level test and, in the absence of the injunction that was issued yesterday, would have raised the minimum salary from $455/week ($23,660/year) to $913/week ($47,476/year), effective December 1, 2016.  Thereafter, the minimum salary would have increased every three years starting on January 1, 2020.

 

Why Did The Court Issue The Injunction?

The Texas Court, in blocking implementation of the new rule, concluded that Congress “intended the EAP exemption to apply to employees doing actual executive, administrative, and professional duties.  In other words, Congress defined the EAP exemption with regard to duties, which does not include a minimum salary level.”  (Emphasis added).  Thus, while the DOL had significant leeway to establish the types of duties that would qualify for the EAP exemption, Congress did not intend for the DOL to define the EAP exemption based on a minimum salary.

The proposed overtime rule specifically provides that employees earning less than $913 per week will not qualify for the EAP exemption, notwithstanding their actual job duties.  According to the Court, this is in direct conflict with Congress’s intent and the DOL effectively exceeded its authority by raising the minimum salary level to such a point that it supplants the duties test.  Therefore, the Court found the proposed rule to be unlawful.

In addition, the Court stated that the current salary level of $455/week was purposefully set low to screen out employees who are obviously not exempt.  By increasing the salary level so significantly in the proposed new rule ($913/week), the DOL essentially created “a de facto salary-only test” which could wrongly exclude employees who are performing executive, administrative or professional duties from the exemption.

 

Employer Recommendations

Many employers expended significant time and effort preparing for the new rule, analyzing their workforce, and deciding whether to issue pay raises to some employees so that they would remain exempt or deciding to reclassify employees as non-exempt and to pay them overtime pay.  For employees in the latter category, their pay may have changed from a base salary to an hourly wage, they may have been told that they now need to track hours, their benefits may have changed, and there may have been many other ramifications.

For employers who already have implemented changes or, at least, communicated changes to employees, what do they do now?  That question needs to be addressed on a case-by-case basis.

For some employers, it may be very difficult to reverse course or, even if possible, it may simply make sense to continue with previously announced changes.  For example:

  • Some employers, in anticipation of the new rule, analyzed the duties for employees who were classified as exempt and determined that they were misclassified under the duties test.  For such employees, unless their job duties have changed, they would still be misclassified and should be reclassified as non-exempt employees.
  • Some employers will not be able to reverse previously announced salary raises because of the impact on employee morale or because of the manner in which raises were communicated.  For such employers, this may be an opportunity to show employees how good they are by explaining that despite the injunction, the company is going to maintain the new salaries that it offered to employees.

 

For other employers, it may make sense to inform employees that previously communicated changes will be reversed.  Obviously, such employers should carefully plan how to communicate that message to employees, should review whether there may be other effects of such a change (such as benefit plan eligibility), and should ensure that doing so will not be in violation of any contractual agreement or other applicable law.

 

Department of Labor’s Response

Obviously, the issuance of a preliminary injunction was not welcome news to the DOL.  In response to the Court’s decision, the DOL released the following statement: “We strongly disagree with the decision by the court, which has the effect of delaying a fair day’s pay for a long day’s work for millions of hardworking Americans. The department’s overtime rule is the result of a comprehensive, inclusive rulemaking process, and we remain confident in the legality of all aspects of the rule. We are currently considering all of our legal options.”

 

What Happens Next?

For employers that procrastinated and had not taken steps to prepare for the new rule, they owe a debt of gratitude to the Texas Judge!  He bailed them out, at least temporarily. But, at least for now, the reprieve is only temporary.  The Texas Court issued a preliminary injunction.  It is possible that when the Judge makes a final determination, he reaches a different conclusion.  Based on the language contained in yesterday’s opinion, that does not seem likely, but it is not out of the question.

Beyond that, the DOL likely will appeal to the United States Court of Appeals for the Fifth Circuit.  If so, and if the decision is reversed, it is possible that employers will be responsible for compliance with the new rule as of December 1 and, if they were not in compliance, it is possible they could be held liable for damages for the period from December 1, 2016, through the date the Court of Appeals issues its decision.

Of course, all of this legal maneuvering is taking place with President-Elect Donald Trump set to take office on January 20, 2017.  Will he and the new leadership at the DOL view this issue the same as the Obama administration?  Not likely.  So, if it is still pending, any appeal could be dropped by the DOL under the new administration.

Might Congress act?  The crux of the Court’s decision yesterday was that the DOL overstepped its authority.  Congress can step in and pass legislation providing for a new salary level, which even many employers agree is too low under the current regulations.

While it is understandable that both employers and employees would like clear answers, we are in uncharted waters and clear answers are not readily available.  Over the next several weeks, hopefully more clarity will be brought to this situation so that everyone knows what is necessary to comply with the law.

 

DECEMBER 2016 UPDATE

On December 1, 2016, the Department of Labor appealed the preliminary injunction to the United States Court of Appeals for the 5th Circuit and, on December 8, 2016, the Court of Appeals granted the DOL’s request for an expedited briefing schedule.  As a result, all briefs must be submitted to the Court by the end of January 2017.  Thereafter, the Court will schedule oral arguments to allow the parties to further argue their positions.

Of course, between now and then a new administration will take office and it is possible that the new Trump administration may choose to drop the appeal.  So, where this process ends remains uncertain and employers and employees should continue to monitor developments in this case.

Leonard Segal Continues to Speak to Employers About Major Employment Law Changes. His Latest Presentation was on November 9, 1016.

In a continuing attempt to help businesses comply with applicable employment laws, on November 9, 2016, Lenny Segal co-presented a session about major employment law changes that employers need to know and understand.  Lenny’s presentation was the featured topic for this month’s Business Owner Seminar series, a series designed for business owners and others who are responsible for running a business.

While there was an almost endless list of possible subjects about which Lenny could have talked, Lenny focused on the new federal overtime regulations that take effect on December 1, 2016, the recently passed Minneapolis and St. Paul sick and safe time ordinances, recent EEOC guidance regarding the rights of transgender employees in the workplace, and several other new and developing topics.

The lunch time program was very well attended and the audience, which asked many good and relevant questions, was terrific.  The energy and enthusiasm was great!

On November 4, 2016, Leonard Segal Presented at Minnesota CLE’s 2016 Real Estate Institute

What’s an employment attorney doing at a real estate CLE?  Well, on November 4, 2016, Leonard Segal served as a panelist for a session entitled “Quick Answers to the Legal Questions that Friends, Relatives and Strangers Will Ask You at Cocktail Parties.”  This well-attended session was part of Minnesota Continuing Legal Education’s 2016 Real Estate Institute and provided an opportunity for real estate lawyers to learn some of the basics in areas of the law about which their friends, family and strangers may ask.  This year’s panel consisted of experienced lawyers in the areas of employment and labor law (Lenny), estate planning, criminal law, and bankruptcy.

Are Minnesota Employees Entitled to Take Time Off From Work to Vote or to Serve as an Election Judge?

This certainly has been a long election season, but voting day is right around the corner (Tuesday, November 8, 2016)!  Are you ready for election day?  Do you know what to do if an employee requests time off from work to vote or to serve as an election judge?

Employees Have the Right to Take Time Off From Work to Vote

In Minnesota, employees who are eligible to vote in a covered election are entitled to take time off from work for the period of time necessary to vote at their polling place and return to work.  Employers are prohibited from deducting from an individual’s wages or from penalizing an employee because of the absence.   A person who violates this law is guilty of a misdemeanor.

Click here for the Minnesota law regarding an employee’s right to time off from work to vote – Minnesota Statute 204C.04.

Employees Have the Right to Take Time Off From Work to Serve as an Election Judge

What about employees who want time off from work to serve as an election judge.  Do employers need to give them time off?  If so, is it paid time off?

Under Minnesota law, an individual who is selected to serve as an election judge is allowed to take time off from work, without penalty, provided he/she gives his/her an employer at least 20 days’ written notice.  The written notice should be accompanied by a certification from the appointing authority which states the hourly pay rate to be paid to the employee and the hours during which the employee will serve as an election judge.  An employer may limit the number of employees absent from work for the purpose of serving as an election judge to no more than 20 percent of the total work force at any single worksite.

The applicable Minnesota statute provides that an employer may reduce an individual’s wages by the amount, if any, paid to the election judge by the appointing authority during the time the employee was absent from work.  That said, employers should be very careful when making a deduction for an employee who is exempt from overtime pay requirements under the federal Fair Labor Standards Act and similar state laws, as such a deduction may not be allowed under those laws.  As such, notwithstanding the Minnesota statute, employers should obtain competent legal advice before making any such deduction.

Click here for the Minnesota law regarding an employee’s right to take time off from work to serve as an election judge – Minnesota Statute 204B.195.

On October 31, 2016, Leonard Segal Presented: Employment Law Bootcamp for Business Lawyers

On October 31, 2016, Leonard Segal co-presented Employment Law Bootcamp for Business Lawyers, a continuing legal education program sponsored by Minnesota Continuing Legal Education.  Attendees had the option of watching via a webcast or attending in person.

During the 3-hour program, which was designed for business lawyers who needed to learn more about employment law, Lenny and his co-presenter addressed 16 different areas of employment law, ranging from the new (updated federal overtime regulations, Minneapolis and St. Paul Sick and Safe Time ordinances, federal Defend Trade Secrets Act), to the old (Family and Medical Leave Act, non-competition agreements), to the cutting edge (medical marijuana and transgender issues in the workplace) . . . and many more topics!

For more information about the program, go the Minnesota CLE website or simply click here.

On October 19, 2016, Leonard Segal Presented a Webcast Regarding the FMLA

On October 19, 2016, as part of Minnesota CLE’s Employment Law Webcast Series, Leonard Segal presented “The FMLA – Basic Law and Practice.”  During his presentation, Lenny guided viewers through the federal Family and Medical Leave Act.  Intended as a basics session, it was an ideal program for those who were new to the FMLA or who needed a refresher.  Attendees left the program understanding how the FMLA works – from employer coverage and employee eligibility requirements, to when and how much leave must be granted, to notice that must be provided by employers and employees.

If the program sounds familiar, it should!  Lenny presented a similar program at the May 2016 Upper Midwest Employment Law Institute.  Lenny’s ELI session received such positive reviews that Minnesota CLE asked him to reprise the program for this webcast series.

For more information about the October 19 webcast, click here.