New FLSA Salary Test Halted

A federal court in Texas has temporarily blocked the implementation of the new FLSA regulations set to take effect on December 1, 2016. On hearing an Emergency Motion for Preliminary Injunction filed by 21 State Plaintiffs, the Court reasoned that a temporary injunction was appropriate. In a decision filed November 22, the Court said that the States could show that when Congress enacted the FLSA, based on the plain language in the statute, it intended for the executive, administrative, and professional exemptions to depend on the employee’s duties and not the employee’s salary, and that in the new FLSA regulations, the DOL “exceeded its delegated authority and ignored Congress’s intent by raising the minimum salary level such that i t supplants the duties test.” The Court observed that DOL itself said that employees who currently fall below the salary threshold would automatically become eligible for overtime without a change to their duties, but Congress did not intend the amount of salary to categorically exclude employees from exempt status. Because the Court found the new regulations unlawful, it also found that the DOL lacked the authority to implement the automatic updates to the salary level.

In granting the preliminary injunction, the Court stated that it would preserve the status quo while it determines the merits of the case. It is likely that the decision will be appealed. However, the future of the regulations is uncertain as the matter is not likely to be resolved before the new Trump Administration takes over, and the new Administration could revise the regulations. For now, employers do not have to comply with the new regulations which would require overtime for employees paid under the new minimum salary threshold, which was $47,476.

This article is authored by attorney Laura Bailey Gallagher and is intended for educational purposes and to give you general information and a general understanding of the law only, not to provide specific legal advice.  Any particular questions should be directed to your legal counsel or, if you do not have one, please feel free to contact us.

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“When you give extra, extraordinary things happen.”

“When you give extra, extraordinary things happen.” Today each of our employees choose an organization that was close to their heart and our firm made a donation in their name. We are proud to be a part of Lancaster County and take part in this wonderful event. We encourage you to do the same! Share the love! DONATE now! #extragive #igiveextra

Extra Give

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Help Me . . . Help You

Most people probably think that “Show me the money!” is the Jerry McGuire quote that best describes lawyers. But that’s not true. The quote that best describes lawyers is “help me . . . help you.” And there are many things that a client can do to help his or her lawyer in a litigation case. Here are some simple, but effective, considerations for a win-win situation. Doing these four things will make your case more efficient, and success more probable.

1. Preserve Evidence. Your lawyer can only defend and prosecute your case with evidence. Also, the failure to preserve evidence can be used against you. Thus, Rule #1: Preserve Evidence. Start by identifying all the potential locations of evidence: Paper format; electronic devices; servers; cloud/online storage; and third party sources. These should be saved to ensure that evidence is preserved. After identifying the sources of documents, help your lawyer by culling and gathering the documents. It is also useful to specifically identify the documents that you think are most relevant to the case. Likewise, identify all potential witnesses and provide your attorney with the last known contact information.

2. Know you’re objective, and what you’re willing to settle for.  At the beginning of the lawsuit, clarify your objectives. Consider the best-case outcomes; consider the worst-case outcomes. And consider the outcomes that you want to achieve. It is also best to consider what you’re willing to concede (or spend), in order to achieve the desired outcome.

3. Understand Risks. Nothing is certain. Nothing is promised. Nothing is guaranteed. Litigation is unpredictable. At least one major fact or witness will turn out completely different than anticipated. The law can be murky, too. An analogy: Imagine that you own a 2007 Honda CRV with a book value of $10,000. Now, imagine that you park the 2007 Honda CRV on the street with a “For Sale Best Offer” sign. What type of offer might you get? Would it matter if your CRV is sold in Lancaster, or Camp Hill, or Gettysburg, or West Chester? The book value might be $10,000; but the reality is that it will be sold on a specific day, at a specific location, with a specific buyer. You might get $10,000 exactly, but probably not. Likewise, the legal books might say that your dispute should be determined one way or another. But the reality is that it will depend on the specific facts of your case, with a specific judge or jury, in a specific location. Just like the sale of the CRV – litigation is not an exact formula.

4. Understand Negotiated Settlement. To avoid unpredictability, and to achieve finality, settlements are wise. But, to get something, you need to give something.

What’s Happening Now . . .

7.5 % Increase

  • Through July 2016, spending on private construction is up 7.5%, compared to 2015.
  • Spending on public construction is up 0.2%.
  • Total construction spending is up 5.6%.
  • Residential construction spending is up 6.5%.
  • Non-residential private construction spending is up 5.1%.

Source: U.S. Census Bureau, July 2016 Construction at $1,153.2 Billion Annual Rate (Sep. 1, 2016).

This article is authored by attorney Jeffrey C. Bright and is intended for educational purposes and to give you general information and a general understanding of the law only, not to provide specific legal advice.  Any particular questions should be directed to your legal counsel or, if you do not have one, please feel free to contact us.

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The Seventh Circuit Court of Appeals has rejected the EEOC’s position that Title VII prohibits discrimination on the basis of sexual orientation. The July 28th decision, Hively v. Ivy Tech Community College, is a blow to the EEOC’s recent efforts to stretch Title VII to encompass sexual orientation, a classification that the statute does not mention. The Seventh Circuit based its ruling on the twin columns of statutory interpretation and judicial precedent: the language of Title VII does not explicitly prohibit sexual orientation discrimination and the case law of the Seventh Circuit has repeatedly denied that Title VII implicitly prohibits it either.

But perhaps the better indicator of the future of Title VII is what the court chose to do after briefly explaining its ruling. Rather than criticizing the EEOC for overreaching, it spent the rest of its lengthy opinion performing an extensive, mostly positive analysis of the EEOC’s justification for its position.

This analysis places a large, unofficial asterisk next to the decision, as the court described the very precedent it relied on to reach its decision as, among other things, “inconsistent.” The main source of the court’s consternation is the difficult task of squaring the Supreme Court’s approval of prohibiting gender non-conformity discrimination with its silence in regard to prohibiting sexual orientation discrimination. Gender non-conformity discrimination is discrimination based on a person’s failure to conform to gender stereotypes about how men and women should act. Many, including the EEOC, have argued that failing to be romantically interested in the opposite gender should just be considered a failure to conform to the gender stereotype that men date women and women date men. But because of Title VII and the Supreme Court’s silence in regard to sexual orientation discrimination, federal courts have consistently refused to extend gender non-conformity discrimination to cover sexual orientation discrimination.

The result is, as the court called it, an “odd state of affairs,” in which heterosexual plaintiffs who suffer gender non-conformity discrimination can more easily bring a discrimination claim than homosexual plaintiffs alleging the exact same discrimination, because the homosexual plaintiffs have the extra burden of proving the discrimination is not based on their sexual orientation. The court also found inconsistency in how the law currently would protect a woman from discrimination on the basis of the superficial way she talks or dresses, but not from discrimination on the basis of her (now legal) marriage to a woman. “We are left,” in the Seventh Circuit’s opinion, “with a body of law that values the wearing of pants and earrings over marriage.”

Such a conclusion makes it clear that as much as the Seventh Circuit felt bound by law and precedent to find Title VII does not prohibit sexual orientation, it also felt that the law and precedent should change. It concluded its opinion with a not-so-subtle call for either a change in legislation or a Supreme Court decision on the issue. The Seventh Circuit may not have endorsed the EEOC’s stance, but it certainly urged an institution with more authority to do so. Employers should be aware that it is likely only a matter of time before such an institution does.

This article is intended to provide general information, not a specific legal opinion or advice. Any particular questions should be directed to your legal counsel. If you do not have legal counsel, please feel free to contact Harmon & Davies, P.C.

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OSHA Gets a Bigger Stick

On August 2, 2016, OSHA’s maximum penalties will increase by 78%. The penalty hike is the result of an interim final rule issued by the U.S. Department of Labor. The increase is intended to bring OSHA penalties, which have not been raised since 1990, in line with inflation.

Under the rule, serious and other than serious violations will now be capped at $12,471 per violation, rather than $7,000. Failure to abate violations, which are calculated on a per day basis, will receive an identical increase—$7,000 to $12,471. The cap on substantial penalties for repeated and willful violations increases from $70,000 per violation to $124,709.

These changes become effective for all citations beginning August 2, 2016. No matter when the violation occurred or when the investigation began, all OSHA penalties after August 1, 2016 will be calculated according to these new maximums.

OSHA’s 2015 Field Operations Manual remains the latest guidance as to how it determines an appropriate fine for violations. The primary consideration in determining penalty amounts is the “gravity of the violation,” which is determined by examining the severity of the injury that could have resulted from a violation, along with the probability that an injury could have occurred. It also allows for reductions in penalties depending on the employer’s size, whether the employer lacks a history of violations, and whether the employer was acting in good faith (i.e., wasn’t purposefully breaking the rules and had an effective safety and health management system in place).

Of course, the cheapest OSHA fine is the one never issued. Having a safety program in place and making sure that employees receive regular training on best safety practices is advisable. Companies should strive to create a culture in which safety always comes first—the increase in OSHA penalties is just one more reason why.

Violation Type Old Max Penalty New Max After August 1
Other than Serious $7,000 $12,471
Serious $7,000 $12,471
Failure to Abate $7,000 a day $12,471 a day
Repeat $70,000 $124,709
Willful $70,000 $124,709

What’s Happening Now . . .

  • The U.S. Economy grew at 1.2% for the second quarter of 2016.
  • Growth hasn’t topped 2% since the second quarter of 2015.
  • The second estimate for the second quarter will be released August 26, 2016.
  • In 2013 and 2014, quarterly growth exceeded 2% in 6 of 8 quarters.

Source: BEA, U.S. Dept. of Commerce, News Release, Nat. Income and Product Accounts  (July 29, 2016).

Newsletter written by Jeffrey C. Bright, Esq., an attorney licensed in Pennsylvania and Maryland.  For more information, contact an attorney at Harmon & Davies, P.C.

This Newsletter is not legal advice.  Unlike this Newsletter, legal advice is specifically tailored to the facts, law, and objectives unique to each circumstance.

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The National Labor Relations Board (“NLRB”) has changed the way that it will determine whether a mixed group made up of employees from a supplier employer and employees from a host employer may constitute an appropriate bargaining unit. In its July 11th Miller & Anderson, Inc. decision, the Board determined that the consent of both employers is no longer necessary. Instead, the Board will apply its standard community of interest test to determine if such a bargaining unit is appropriate.

In other words, temps employed by a personnel supplier company who work for a business and employees working only for that business will be able to vote on representation together if the two groups perform a similar kind work under similar conditions and have common supervision. Employers hiring temps should be aware that if temps make up a high enough percentage of the bargaining unit, the unit could unionize without any support from the permanent employees working directly for the host employer.

According to the Board, each employer will have an obligation to bargain only over the employees with whom it has an employment relationship and only in regard to the terms and conditions that the business has the authority to control. This means that the host business will have an obligation to bargain concerning the terms and conditions of employment for both the temps and its own regular employees in the bargaining unit, while the temp agency will only have an obligation to bargain with its temps, not the regular employees working alongside them. The business and the temp agency would then need to bargain with employees over the terms and conditions of employment that each employer could control.

This ruling overturns a 2004 decision by the Bush Board, known as Oakwood, and returns to the 2000 decision by the Clinton Board in M.B. Sturgis, which Oakwood had overturned. In Sturgis, the Board had reversed almost thirty years of clear precedent requiring mutual consent of both employers before employees of separate companies could be combined into a single bargaining unit.

The Miller & Anderson decision compounds the existing hazards of outsourcing labor to a temp agency created by the Board’s ruling in Browning-Ferris. In that case, the Board found that the presence of “indirect control” is enough to determine the existence of a joint employer relationship, a significant change from the previous requirement that an employer had to directly exercise its power over employees to establish a joint relationship. As Board member Philip Miscimarra noted in his Miller & Anderson dissent, “the majority’s expansion of Browning-Ferris here will only make it more difficult for parties to anticipate whether, when or where this new type of multi-employer/non-employer bargaining will be required by the Board, nor can anyone reasonably predict what it will mean in practice.” As a final note, given the Board’s predilection for reversing itself, both Browning Ferris and Miller & Anderson will have a short shelf life if the Board’s composition changes as a result of the November elections.

This article is intended to provide general information, not a specific legal opinion or advice. Any particular questions should be directed to your legal counsel. If you do not have legal counsel, please feel free to contact Harmon & Davies, P.C.

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As drones continue to get less expensive, construction companies may find it increasingly practical to use them for anything from roof inspections to aerial photographs of jobsite progress. Until recently, the Federal Aviation Administration (“FAA”) has only permitted such commercial use of drones on a case by case basis, granting exceptions only if the drone operator had a pilot’s license. Thankfully for businesses looking to take advantage of this emerging technology, the FAA recently passed new, much less restrictive regulations for the commercial use of drones that will go into effect on August 29th of this year.

Most significantly, the new FAA drone regulations no longer require a pilot’s license for commercial operation. Instead, for an estimated cost of $150—a relative bargain compared to the time and expense of acquiring a pilot’s license—drone operators will need to pass an “aeronautical knowledge test” at an FAA exam site or operate the drone under the direct supervision of someone that has. In addition to passing that test, a prospective drone operator will need to be at least 16 years old and receive vetting by the Transportation Security Administration. Those who already have a pilot’s license (not including a student pilot’s certificate) and have completed a flight review within the last two years will only need to pass an online test to receive commercial drone operation certification.

Beyond the certification process, the new regulations also include several rules for safe flying. The good news is that none of these requirements should place any real burden on a construction company’s most common uses of a drone.

The rules require that the drone weigh less than 55 lbs., which is a weight that nearly every commercially available drone is well under. As for the scope of operations, the rules require drone operators to fly their aircraft only during daylight hours, under 400 feet above ground level or 400 feet above a building, while not travelling more than 100 miles per hour. Additionally, the drone cannot operate over top of any person not directly participating in the flight that is not inside a structure or vehicle. The drone must also always remain within the visual line of sight of either the operator or a single visual observer. None of those restrictions should at all inhibit aerial photography—the most common use of drones in the construction industry.

Those eager to begin studying for the commercial drone operator exam, which will become available soon after the new rules take effect, can do so by taking the online test made for people who already have a pilot’s license. Though passing the exam without a pilot’s license will not certify you as a drone operator, the FAA does recommend it as a “self-study” resource for the exam that will.

This article is intended to provide general information, not a specific legal opinion or advice. Any particular questions should be directed to your legal counsel. If you do not have legal counsel, please feel free to contact Harmon & Davies, P.C.

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DOL Sues Employer for Unpaid Pre- and Post-Shift Work

The Department of Labor (DOL) filed a lawsuit against Five Star Automatic Fire Protection in the Western District of Texas on July 7th, alleging the company failed to properly compensate its workers for labor they performed prior to and following their standard shifts. The DOL is seeking $321,000 in back pay and damages—a sharp reminder that the Fair Labor Standards Act (FLSA) requires employers to fully compensate their employees for all the work they do, including work done before and after they are on the job site.

The DOL’s attempted application of the rule is not new or even surprising, but it should grab employers’ attention, because it is a prime example of the type of wage and hour practices that put an employer on the wrong end of a costly lawsuit.

According to the DOL complaint, Five Star required its workers to begin their day at its office, where they loaded materials into a company vehicle before driving to the job site. After they were done at the jobsite for the day, Five Star required them to return the company vehicle to the office. The DOL has filed a complaint because it alleges Five Star did not compensate employees for this pre-shift and post-shift work.

FLSA requires employers to pay employees for all hours worked. Generally, any activity performed for an employer, whether it is done on the job site, at the office, or even off work premises, counts as time worked if the employer knows or has reason to believe work is being done. Activities such as preparing materials integral for work—the kind of pre-shift and post-shift work performed in this case—must be compensated as work. Even if Five Star did not intend to purposefully shortchange its workers, that fact alone will not shield it from liability. Remember: An employer must pay workers for all hours the employer knew or “should have known” the employee worked, and for hours that exceed 40 in a workweek, the employer must pay time-and –a-half. The unpaid pre-shift and post-shift hours, if properly counted, most likely cause the employees’ hours worked to exceed 40, and therefore the failure to pay for both the hours and overtime hours worked may be deemed a significant violation.

Employers can avoid placing themselves in Five Star’s position by ensuring that all hours are recorded accurately and that employees are not performing work outside of the time they are clocked in. Contractors can give their employees an option of riding to the jobsite in a company vehicle but employees cannot be allowed to perform any work before they arrive at the jobsite—or they will be in the same position as Fivestar is in this case.  If you have any questions about travel policies or any other FLSA issues, please contact us at Harmon & Davies, P.C.

This article is intended to provide general information, not a specific legal opinion or advice. Any particular questions should be directed to your legal counsel. If you do not have legal counsel, please feel free to contact Harmon & Davies, P.C.

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SCOTUS Denies DOL Deference: Will it do the same for EEOC?

On June 20, 2016, in Encino Motorcars, LLC v. Navarro, the Supreme Court decided not to defer to a US Department of Labor (DOL) rule that declared car dealerships’ service advisors eligible for overtime pay under the Fair Labor Standards Act (FLSA). Instead, in a 6-2 opinion, the Court found that the DOL did not provide a sufficient explanation as to why it departed from its long standing position that service advisors were ineligible for overtime under FLSA. The Court found the DOL’s scant rationale for its rule change impermissibly “conclusory” and sent the case back to the Ninth Circuit, leaving it to that court to determine, without deferring to the DOL rule, whether the FLSA overtime exemption covers service advisors.

As Justice Ginsburg noted in her concurring opinion, this ruling does not change the state of the law. Federal agencies have long been required to provide an “adequate reason” to justify a change in policy. However, the Court’s enforcement of that requirement serves as a potent reminder that it will not rubber stamp every new rule or interpretation an agency passes down.

The Court’s willingness to defer to an agency may very well become the central issue in the continually escalating dispute over whether Title VII and Title IX’s bar on sex discrimination includes discrimination on the basis of gender identity and sexual orientation.

While Title VII protects employees from discrimination and Title IX protects students, the laws are so similar that courts often look to rulings on one to help interpret the other. For that reason, although the highest appellate court decision on the gender identity issue, G.G. v. Gloucester County School Board, is a Title IX case, its eventual resolution may provide guidance as to the validity of the EEOC’s recent positions that discrimination on the basis of sexual orientation, which it has alleged in two recent suits, and on the basis of gender identity, a position the EEOC first enforced back in 2012, amounts to impermissible sex discrimination under Title VII.

Gloucester County School Board indirectly supports the EEOC’s positions. Applying the Auer doctrine, which instructs courts to give deference to an agency’s interpretation of its own ambiguous regulations unless the interpretation is unreasonable, the Fourth Circuit Court of Appeals determined that it owed the US Department of Education’s (DOE) interpretation of Title IX “controlling weight.” The DOE’s interpretation defined sex discrimination as inclusive of discrimination on the basis of gender identity, which contradicted the School Board’s policy of separating bathrooms by birth sex.

The School Board has announced its intention to appeal the Fourth Circuit’s decision to the Supreme Court. How the Court would rule is far from obvious: Though the Encino decision suggests the Supreme Court is not always amenable to deferring to an agency, the Court did recently pass up the opportunity to hear a case in which it could have overturned Auer. In the end, the Court may choose not to rule on an issue as decisive as the expansiveness of sex discrimination under Title VII and IX until it has regained a ninth justice. In the interim, expect the EEOC to continue enforcing its own interpretation.

For more information, contact an attorney at Harmon & Davies, P.C.

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PA Workplace Misclassification Act

In March 2016 the Pennsylvania Department of Labor and Industry produced a white paper report on the “Administration and Enforcement of the Construction Workplace Misclassification Act in 2015.” Under the Act, the DLI investigates and penalizes construction companies that misclassify employees as independent contractors.

Here’s a quick snapshot from the Report:

pic for 4-29-16 blog

But in 2013, under similar circumstances, the Pennsylvania Commonwealth Court held that the general contractor’s payments to the subcontractor did not afford protection, and the Prompt Payment Act did not shield the contractor and the surety from liability. Berks Products Corp. v. Arch Ins. Co., 72 A.3d 315.

Those are the cases of Workplace Misclassification that the Bureau of Labor Law Compliance has investigated in the past five years. Notably, there were more investigations in 2015 than the previous four years combined. Also, the investigations netted $217,450 in penalties, which is a 1,612% increase from the 2014 penalty amount. In fact, the Bureau only collected $12,700 in penalties in 2014. Point being, DLI is emphasizing the enforcement of this Act, and all construction companies should take a very close look at how they supply manpower to their projects.

The Workplace Misclassification Act applies to all construction companies working on all types of projects—public, private, residential, or commercial. The Act sets forth a checklist of considerations that are scrutinized when determining if a laborer on a project is actually an independent contractor. If the laborer is misclassified as an independent contractor—when in fact he is really an employee—DLI will levy a fine. In some instances, DLI has the authority to seek criminal prosecutions.

To comply with the Act, every independent contractor must have a written contract. Further, every laborer should be analyzed with consideration of the numerous other requirements under the Act. DLI generally receives its leads from (1) complaints filed by laborers; (2) findings made during construction site visits; and (3) referrals from other government agencies, particularly the Office of Unemployment Compensation Tax Services. To avoid penalties, it is best to review your laborers and seek legal advice as necessary.

What’s Happening Now . . .

11.2 % Increase

  • Increase in construction spending for first two months of year, comparing 2015 to 2016.
  • Construction spending for January & February 2015 was $141.3 billion.
  • Construction spending for January & February 2016 was $157.1 billion.

Source: U.S. Census Bureau News, February 2016 Construction at $1,144.0 Billion Annual Rate, U.S. Dept. of Commerce (Apr. 1, 2016).

Newsletter written by Jeffrey C. Bright, Esq. , an attorney licensed in Pennsylvania and Maryland. For more information, contact an attorney at Harmon & Davies, P.C.


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