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Employment & Labor Law FLASHPOINTS October 2019

October 15, 2019Print This Post Print This Post

Amanda Tiebert Collman, Robbins Schwartz, Chicago
312-332-7760 | E-Mail Amanda Tiebert Collman

Update on the Department of Labor’s Recent Activities: New Overtime Rule and Employer-Forced FMLA Designation

Department of Labor Issues New Overtime Rule

The wait is over! On September 24, 2019, the Department of Labor issued its 245-page rule updating the overtime and minimum wage exemption requirements of the Fair Labor Standards Act of 1938 (FLSA), ch. 676, 52 Stat. 1060. 84 Fed.Reg. 51,230 (Sept. 27, 2019). Per the DOL, the final rule updates the earning thresholds necessary to qualify for the “white collar” minimum wage and overtime exemptions under the FLSA. The new rule also allows certain bonuses to apply towards meeting the salary threshold. The final rule is effective January 1, 2020.

The final rule

  1. increases the standard salary threshold for executive, administrative, and professional exemptions to $684 per week, or $35,568 per year (up from $455 per week),

  2. increases the “highly compensated employee” exemption salary threshold to $107,432 per year (up from $100,000 per year),

  3. allows employers to use nondiscretionary bonuses paid at least annually to satisfy up to ten percent of the standard salary threshold, and

  4. revises special salary thresholds for workers in U.S. territories and the motion picture industry.

The DOL made no revisions to the “job duties test” portion of the white-collar exemption rules.

Department of Labor Reviews Impact of Its March 2019 FMLA Opinion

The DOL, in DOL Wage & Hour Op.Ltr. No. FMLA2019-1-A (Mar. 14, 2019), rejected an employer’s practice of delaying Family and Medical Leave Act of 1993 (FMLA), Pub.L. No. 103-3, 107 Stat. 6, leave designation when requested by employees. In DOL Wage & Hour Op.Ltr. No. FMLA2019-3-A (Sept. 10, 2019), the DOL has answered an inquiry regarding the impact of this “forced” immediate FMLA leave designation.

The DOL’s recent opinion responds to an employee who was unhappy with the consequences of forced FMLA designation. The employee reported that her employer changed its leave policy in reliance on the DOL’s March opinion. Per the employer’s new policy, it was designating FMLA leave as soon as it became aware that an employee needed leave for an FMLA-qualifying reason. Her employer also commenced the paid leave provided under its collective-bargaining agreement (CBA) at the same time as the FMLA leave.

When an employee uses the CBA paid leave, the entire absence is treated as “continuous employment” for purposes of seniority status under the state’s civil service rules. Accordingly, when an employee uses FMLA leave concurrently with CBA paid leave, the employee accrues seniority during the absence. However, under the employer’s policies, unpaid leave, including FMLA leave, does not constitute “continuous employment” and does not count for seniority purposes.

The inquiring employee was concerned that, in light of the above, FMLA leave was providing a lesser benefit to employees than their CBA paid leave. The employee inquired as to whether her employer had to designate leave as FMLA even when an employee would prefer to delay the start of FMLA leave so as to not adversely impact their seniority status.

In response, the DOL affirmed its position that employers are not to delay the designation of FMLA-qualifying leave as FMLA leave. The DOL explained that this is the case even when an employer is otherwise obligated, per a CBA, to provide job benefits greater to those required by the FMLA.

With respect to which benefits must be provided while an employee is on FMLA leave (other than group health benefits), the DOL affirmed that it looks to the employer’s established policies for other forms of paid or unpaid leave. In those situations, if an employer’s established leave policy does not permit the accrual of seniority during an unpaid leave, no seniority would be accrued during unpaid FMLA leave either.

In the employee’s specific case, the CBA provided for accrual of seniority while employees use accrued paid leave. As such, the DOL determined that the employer was required to allow its employees to accrue seniority while substituting FMLA leave for the accrued paid leave. As the employer was already doing this, the DOL decided that the employer was properly applying the FMLA. Under the employer’s policies, when an employee takes FMLA leave that runs concurrently with CBA-protected accrued paid leave, the employees’ seniority status is the same as it would be if the employee took only CBA-protected paid leave.

The above would change, however, once the employee exhausted her CBA paid leave and moved into unpaid leave. At that point, the employer’s policy regarding benefits during other unpaid leaves would govern whether the employee accrued seniority status while on unpaid FMLA leave. There would be no violation of the FMLA as long as the employer was following its policies for other types of unpaid leave.

For more information about employment and labor law, see EMPLOYMENT DISCRIMINATION: UNLAWFUL GROUNDS AND PREVENTION — 2019 EDITION. Online Library subscribers can view it for free by clicking here. If you don’t currently subscribe to the Online Library, visit www.iicle.com/subscriptions.

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