I’ve been eagerly anticipating new developments on the federal overtime rules since last year, and after almost a year of inactivity, it appears there may be a revised rule on the way.

Here’s the background: early last year, the Department of Labor announced a revision to the federal overtime requirements which would expand workers’ eligibility to receive overtime pay, as further discussed in this post: New Federal Rule Increases Employee Eligibility for Overtime Pay. But then in November of 2016, a federal judge in Texas issued an injunction preventing the new rule from taking effect as scheduled in December 2016.

The latest development is that the Department of Labor has requested public comment on the proposed overtime rule, which suggests that the rule will be further revised sometime in the near future. If you’re interested in submitting a public comment for consideration, comments can be submitted online at http://www.regulations.gov or by mail addressed to Melissa Smith, Director of the Division of Regulations, Legislation, and Interpretation, Wage and Hour Division, U.S. Department of Labor, Room S-3502, 200 Constitution Avenue NW, Washington, DC 20210.
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Imagine this scenario: you’re excited about your new job with a large payroll processing company, and as a part of the employment offer, you’re directed to a company website that contains the terms of a stock award program. You quickly skim through it, check the box indicating that you’ve read and accept the terms, and click submit. As you skimmed through it though, you missed that the terms included a non-solicitation clause that restricts you from soliciting clients and prospective clients for one year after you leave the company.

Are you bound by that non-solicitation clause buried in the terms of the stock award program?   
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iStock Employment  ApplicationPursuant to a recent ruling by the Pennsylvania Commonwealth Court, employers who require employees to take drug or alcohol tests are not required to keep the results of such tests confidential pursuant to the Pennsylvania Drug and Alcohol Abuse Control Act.

On October 28, 2016, the Court issued an opinion that the Control Act only provides confidentiality of drug and alcohol tests relating to patients who take drug or alcohol tests for treatment purposes, and not to an employee, who took a drug or alcohol test for employment purposes.

The opinion is at odds with a 1999 case, Murray v. Surgical Specialties Corp., which held that the Control Act prohibited an employer from releasing employee drug tests results taken for employment purposes.
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As a follow-up to my recent presentation to the talented entrepreneurs at Assets Lancaster about employment and business law issues, I wanted to create a resource that outlines some of the myths we hear associated with employment and the law.

This is by no means an exhaustive list, and if you have more questions or are wondering about a particular issue that you’ve encountered, feel free to contact us!

Myth 1: Paying employees under the table is permitted under the law.

Payment of employees under the table and failure to withhold Pennsylvania personal income tax on wages, tips or other forms of taxable compensation is illegal and considered tax evasion. The Pennsylvania Department of Revenue investigates tax fraud claims and such claims can be submitted here.

Similarly, the IRS also investigates claims for tax evasion for failure to withhold federal employment taxes. Each year, the IRS assesses billions of dollars in penalties to employers who fail to pay employment taxes and accurately report employee income.

Myth 2: An employee who is paid a salary is exempt from being paid overtime.

As discussed in this post by Christina Hausner, there are a number of circumstances in which salaried employees are entitled to overtime pay. All employees are entitled to overtime unless they are exempt under applicable law. The Fair Labor Standards Act provides specific rules as to who is exempt. Payment of wages on a salary basis does not make an employee exempt from overtime or minimum wage entitlement.

There are some pending changes to existing law proposed by the United States Department of Labor. What are known as white collar exemptions are now being rewritten to require payment of a greater minimum annual salary to qualify as exempt than is currently applicable.
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Everyone knows about the recent Supreme Court decision Obergefell v. Hodges with regard to gay marriage. Last year, President Obama entered an Executive Order prohibiting federal contractors from discriminating on the basis of gender identity and sexual orientation.  In recent years, there has been a gradual acceptance that discrimination against transgender individuals constitutes discrimination on the basis of sex prohibited under federal law Title VII of the Civil Rights Act of 1964. Now, for the first time, EEOC (Equal Employment Opportunity Commission), the federal agency charged with enforcing discrimination laws, held in a July 15, 2015 decision that discrimination on the basis of sexual orientation necessarily involves discrimination on the basis of sex and is unlawful under Title VII.

The significance of this decision is that employers cannot rely on the fact that Congress never added “sexual orientation” as a protected class to federal anti-discrimination laws which expressly name race, color, religion, sex and national origin as bases for protection.  Sexual orientation discrimination is now a subset of sex discrimination.

In reviewing the many claims of discrimination on the basis of sexual orientation, courts have consistently held that Title VII does not prohibit sexual orientation discrimination.  However, discrimination on the basis of what is referred to as “gender stereotyping” has been recognized, most notably in the 1989 Supreme Court decision in Price Waterhouse v. Hopkins.  There, the plaintiff claimed that she was denied a promotion because her employer found that her actions and conduct were not sufficiently feminine. The Court upheld her claim, stating that Title VII applied to discrimination because of gender, not just biological sex. 
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On July 6, 2015, the Department of Labor proposed changes to the manner in which overtime pay is calculated for executive, administrative and professional employees.  These employees, collectively referred to as white collar workers, have been exempt from overtime pay protections for many years.  To be considered exempt, the employees must meet certain minimum tests related to their primary job duties and be paid on a salary basis at not less than $455 a week ($23,660 a year), which amount was last updated in 2004.

Now, the Department of Labor proposes to update that salary level to $921 a week or $47,892 annually. These amounts represent calculations based on 2013 statistics; the adjusted levels as projected for 2016 would be $970 a week or $50,440 per year.

These changes are to the rules interpreting the exemptions under the Fair Labor Standards Act and can be enacted and approved without Congressional action.  However, there is a 60-day comment period (through September 4, 2015) during which individuals, corporations and other organizations can express opinions which could result in changes to the rule that is ultimately adopted.  It is not clear whether or when these proposed changes will become effective, and what actions opponents will take to try to block implementation.  Because these are regulations under the FLSA, not the statute itself, these rules will not be voted on by Congress.

If the rule is adopted and a worker would otherwise meet the definition of an executive, administrative or professional employee but earns less than $47,892 per year, that employee would have to be paid time and a half for hours worked over 40 per week.  In addition, in order to prevent the salary level requirements from becoming outdated, the Department of Labor proposes to automatically update the minimum salary levels on an annual basis.
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