Categories
Union Matters

Shift Away From Private Sector Unions to Public Sector Unions

Shift Away From Private Sector Unions to Public Sector Unions

By Richard H. Wessels of Wessels Sherman Joerg Liszka Laverty Seneczko P.C. posted in Union Matters on Monday, November 28, 2016.

(Second part of the series on the State of Labor Unions in America)

Few graphs can be more dramatic than the two showing membership trends of private and public sector unions. Look at what is happening.

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These graphs go back to the early 1980s. If you look further back you will see that private sector unions were at their peak in the 1950s. They then had about 35% market share. Public sector unionism at that time was minimal. The private sector had since 1935 been regulated by the National Labor Relations Act. There was little regulation (for or against) of public sector unions. This changed with JFK’s executive order in the early 1960s (Executive Order 10988 signed by JFK on January 17, 1962). This opened the door for federal unions. There was lively debate back at that time over what many saw as a fundamental conflict between public sector bargaining and the role of government. To many, there was an inconsistency. It was troubling that unions would bargain with politicians who owed their jobs to big voting blocs like organized labor. As could be expected, public sector bargaining won out and the flood gates opened. Postal workers gained bargaining rights after a strike in 1970 and postal worker issues were force fed into the essentially private sector National Labor Relations Act. States took various routes. Some granted full bargaining rights to public sector unions, others granted limited rights and some made public sector bargaining illegal. But, the wave of public sector unions crashed down upon us and today it is about dead even with an approximately equal number of union members in the public sector as in the private sector. This would have been totally unthinkable back In the 1950s. Questions? Contact Attorney Richard H. Wessels at (630) 377-1554 or by email at riwessels@wesselssherman.com

Related Posts: Merry Christmas, and Happy New Year Employers, Life Raft For Multiemployer Pension Plans, Operating Engineers Local 150 Remains One of Northern Illinois Most Active Unions, No Recording Rules-NLRB Protected?

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Categories
Non-Compete

Legislative Update: Some Non-Compete Agreements Unenforceable Under New Illinois Law

Legislative Update: Some Non-Compete Agreements Unenforceable Under New Illinois Law

By Anthony J. Caruso Jr. of Wessels Sherman Joerg Liszka Laverty Seneczko P.C. posted in Non-Compete on Monday, November 14, 2016.

New Law Affects Non-Compete Agreements for Employees earning less than $13 per hour

Today, many employers use non-compete agreements to protect their company’s business. As such, the issue is always whether or not a non-compete agreement is enforceable for the Company. Now, in Illinois, there is a clear directive as to certain employees that the non-compete agreement is NOT enforceable by Illinois law. On August 19, 2016, Illinois Governor Bruce Rauner signed into law the Illinois Freedom to Work Act, effective January 1, 2017.

What is a covenant not to compete under this law?

An Agreement between an employer and a low wage employee that restricts such low wage employee from performing:

· Any work for another employer for a specified period of time

· Any work in a specified geographical area, or

· Work for another employer that is similar to such low-wage employee’s work for the employer as a party to the agreement.

What is the effect of the law?

Such agreements entered into after the effective date of this law, January 1, 2017, ARE ILLEGAL AND VOID.

What EMPLOYERS are covered under this law?

“Employer” includes any individual, partnership, association, corporation, limited liability company, business trust, or any person or group of persons acting directly or indirectly in the interest of an employer in relation to an employee, for which one or more persons are gainfully employed on some day within a calendar year. “Employer” does NOT include governmental or quasi-governmental bodies.

What low-wage EMPLOYEES are covered under this law?

An employee who earns less than $13 an hour.

Note: This law does NOT bar all non-compete agreements in Illinois, but rather, it restricts the use of such agreements with certain employees.

Employers may want to review their use of non-compete agreements with regard to their business.

Questions? Contact Attorney Anthony Caruso at Wessels Sherman St. Charles office at (630) 377-1554 or by email at ancaruso@wesselssherman.com.

Related Posts: Seneczko Wins Default as Discovery Sanction in Duty of Loyalty Claim, Illinois Workplace Transparency Act, Illinois Employers Should Not Go Overboard With Non-Compete Agreements!, Twelve Commonly Asked Questions About Non-Compete Agreements In Illinois

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Categories
Independent Contractor

Independent Contractor Protection Laws

Independent Contractor Protection Laws

By Nancy E. Joerg of Wessels Sherman Joerg Liszka Laverty Seneczko P.C. posted in Independent Contractor on Tuesday, November 29, 2016.

NEW LAWS SPRINGING UP: With the change in our national economy and workforce tilting more and more towards “self-employment” and independent contractor status, new laws are springing up, both state and federal, to respond. Some of these new laws intend to punish companies who “misclassify” employees by (incorrectly) calling them independent contractors.

NEW YORK LAW TO PROTECT INDEPENDENT CONTRACTORS: On November 16, 2016, New York City Mayor de Blasio signed the Freelance Isn’t Free Act. This creative new law was designed to uniquely PROTECT independent contractors who are not paid their contract fees. Under the law, there are harsh penalties for “employers” who stiff freelancers or delay payment to freelancers. The Freelance Isn’t Free Act defines a “freelance worker” as “any natural person or organization composed of no more than one natural person, whether or not incorporated or employing a trade name, that is hired or retained as an independent contractor by a hiring party to provide services in exchange for compensation.”

The law will impose double damages and attorneys’ fees for any litigation which is successful in finding violations of the law. The law will also require “employers” to pay freelancers in full no later than 30 days after the contracted for services are completed.

LEGISLATIVE TREND TO ACCEPT LEGITIMATE INDEPENDENT CONTRACTORS: It is significant that there is a legislative trend growing nationwide to accept that there are legitimate independent contractors (and that they are important to our economy)-and that laws are needed to ensure the fair treatment of the independent contractors.

Questions? Contact Attorney Nancy E. Joerg in our St. Charles office at (630) 377-1554 or by email at najoerg@wesselssherman.com

Related Posts: Yes, You Can Win Before an IDES Hearing Officer on the Issue of Independent Contractor Status!!, IRS Form SS-8 Continues To Upset And Confuse Employers Across The U.S.!, Psychological Counselors In Pennsylvania Found To Be Independent Contractors, Yes, There are Certain Categories of Workers Who Are Independent Contractors By Law Under the Illinois Unemployment Insurance Act

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Categories
Illinois Department of Employment Security (IDES)

Five Key Questions Regarding IDES Follow-Up Audits

Five Key Questions Regarding IDES Follow-Up Audits

By Nancy E. Joerg of Wessels Sherman Joerg Liszka Laverty Seneczko P.C. posted in Illinois Department of Employment Security (IDES) on Friday, November 18, 2016.

I am getting an increasing number of phone calls from very nervous people who have heard that the Illinois Department of Employment Security (IDES) is now auditing Illinois companies based solely on the fact that the company had a prior IDES audit involving alleged “misclassification of independent contractors” (“follow-up audits”).

In the past, the IDES didn’t target a company for an audit based only on the fact that the company had a prior IDES audit and “flunked the independent contractor test.” This is a dramatic change by the IDES in its auditing policy! Naturally, many business owners are alarmed by this change (and what it means!)

I thought it might be helpful for readers to consider the kinds of questions I’ve been getting and the answers that I have been giving:

Question 1: Does the IDES have the legal right to do a “follow-up audit”?

Response to Question 1: Yes, the IDES can audit any company in Illinois on whatever basis it wishes.

Question 2: How many years can the IDES go back if it does do a “follow-up audit”?

Response to Question 2: The IDES is regulated by the Illinois Unemployment Insurance Act, a state law. Under the state law, the Statute of Limitations is four years.

The Statute of Limitations expires four years (sixteen full quarters) from when the company’s quarterly report was due to be filed with the IDES.

The Statute of Limitations is based on a rolling quarter system. The IDES “closes” quarters after the due date of the quarterly report. (The quarterly report is due to be filed with the IDES at the end of the month following the close of the quarter.)

If a Determination & Assessment was dated on or before January 31, 2016, the Statute of Limitations would allow the IDES to go back sixteen full quarters prior to October 1, 2015-or as of October 1, 2011.

Note: If the IDES believes an employer has knowingly failed to pay contributions, the IDES can go back further and the Statute of Limitations does not apply.

Question 3: Will the IDES negotiate with the company if an assessment is issued as a result of a “follow-up audit”?

Response to Question 3: No, the IDES auditor has no ability to negotiate any assessments as a result of any kind of IDES audit.

Question 4: How are fraud penalties tied in with IDES “follow-up audits”?

Response to Question 4: Illinois companies who are “re-audited” should brace themselves for Determination and Assessments (audit tax bills) with 24% interest—and then ANOTHER 60% piled on top of that-if they are found to have intentionally MISCLASSIFIED their independent contractors (fraud).

Question 5: Are all companies who are audited by the IDES and then found to be guilty (i.e., misclassified independent contractors) hit with a “follow-up audit”?

Response to Question 5: No, it seems to be the luck of the draw. Certainly not all of the companies that I’ve worked with over a great many years on IDES audits have been hit again by a “follow-up audit”. However, in this past year, there has been an alarming increase of follow-up IDES audits. This disturbing trend shows no signs of ending.

For assistance with an IDES audit or evaluating your use of Independent Contractors, contact Nancy Joerg at Wessels Sherman’s St. Charles, Illinois office: 630-377-1554 or email her at najoerg@wesselssherman.com.

Related Posts: Legislative Update: Key Changes to the Illinois Human Rights Act New Employee Rights and New Requirements for Employers, Don’t Fall Asleep On One Of The Most Important Due Dates Regarding Your IDES Audit!, It’s Easier for Illinois Employers to Win Before the IDES on Cases involving Misconduct, Help! I Just Found Out I Am Going To Be Audited By The IDES!

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Categories
Firm News

Wessels Sherman is Pleased to Announce that Allison Wells has Joined our Firm as an Associate Attorney in our Minneapolis, MN Office.

Wessels Sherman is Pleased to Announce that Allison Wells has Joined our Firm as an Associate Attorney in our Minneapolis, MN Office.

By James B. Sherman of Wessels Sherman Joerg Liszka Laverty Seneczko P.C. posted in Firm News on Thursday, November 17, 2016.

Allison Wells comes to Wessels Sherman from a highly regarded Twin Cities immigration law firm, where she focused her practice on representing employers in all aspects of employment-based immigration matters. Her extensive experience includes helping employers throughout much of the country with a broad spectrum of workplace immigration needs, including: EB-1 multinational managers, PERM Labor Certification/I-140, L-1A/B, H-1B, O-1, TN, B-1, H-2, family based petitions, waivers, naturalization, and U Visa. She also works with employers on I-9 and other compliance audits.

In addition to assisting the firm’s clients throughout the Midwest and beyond with immigration-related matters, Ms. Wells’ practice will include counseling and representing employers before state and federal courts and administrative agencies, on employment and labor matters. Ms. Wells holds a Bachelor of Arts degree with a double major in Spanish and Journalism, and a Master’s degree in Spanish Language and Literature from Marquette University. She graduated with honors from William Mitchell Law School and served as editor of the William Mitchell Law Raza Journal of Law and Diversity. Allison speaks fluent Spanish and resides in the Twin Cities area with her husband, Andy and daughter, Sloan. Please join us in welcoming Allison Wells to Wessels Sherman!

Tags: associate attorney, new attorney, news

Related Posts: Wessels Sherman Offers a New Service to its Clients – Early Mediation of Internal Workplace Disputes!, On the Lighter Side, Wessels Sherman’s 2017 Employer Empowerment Seminar in Minnesota is Another Big Success! , SAVE THE DATE: Friday, April 28th, 2017!!!

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Firm News

SAVE THE DATE: Friday, April 28th, 2017!!!

SAVE THE DATE: Friday, April 28th, 2017!!!

By James B. Sherman of Wessels Sherman Joerg Liszka Laverty Seneczko P.C. posted in Firm News on Thursday, November 17, 2016.

Each year, Wessels Sherman hosts a full-day seminar where attorneys from our offices in Chicago, IL; Minneapolis, MN; Milwaukee, WI; and Davenport, IA, come together in one of our locations, to present on many of the most important workplace issues faced by employers around the country. In 2017, the location will be here, in Minneapolis. Mark your calendars now to attend this one-of-a-kind event to hear from our highly experienced attorneys – and guest speakers – from across the Midwest, on cutting edge HR, labor and employment topics. Here are the basics:

WHEN: Friday, April 28th, 2017

WHERE: Radisson Blu, Mall of America

WHAT: Lots of valuable information presented in a fun/lively fashion!

WHY: Because it’s valuable information, presented in a fun/lively fashion, at a very reasonable cost!

Questions? Contact Tyler Birschbach at tybirschbach@wesselssherman.com or 952-746-1700.

Related Posts: Wessels Sherman Offers a New Service to its Clients – Early Mediation of Internal Workplace Disputes!, On the Lighter Side, Wessels Sherman’s 2017 Employer Empowerment Seminar in Minnesota is Another Big Success! , Wessels Sherman is Pleased to Announce that Allison Wells has Joined our Firm as an Associate Attorney in our Minneapolis, MN Office.

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Categories
Employment Policies and Procedures

The Marijuana Plant Keeps Growing!

The Marijuana Plant Keeps Growing!

By Walter J. Liszka of Wessels Sherman Joerg Liszka Laverty Seneczko P.C. posted in Employment Policies and Procedures on Wednesday, November 23, 2016.

In two (2) Wessels Sherman Client Alerts (August, 2015 and December, 2015) I wrote articles about the expansion of Medical Marijuana usage and its authorization in then twenty-three (23) States (Alaska, Arizona, California, Colorado, Connecticut, Delaware, Hawaii, Illinois, Maine, Maryland, Massachusetts, Michigan, Minnesota, Montana, Nevada, New Hampshire, New Jersey, New Mexico, New York, Oregon, Rhode Island, Vermont, and Washington, as well as the District of Columbia) and also the fact that there were four (4) States that permitted the “recreational use” of Marijuana that also allowed Medical Marijuana (Alaska, Colorado, Oregon, and Washington). With the past Election of November 8, 2016, that list of States is rapidly expanding.

In point of fact, four (4) additional States (Arkansas, Florida, Montana, and North Dakota) have just approved the use of Medical Marijuana initiative and an additional five (5) States that had previously approved Medical Marijuana (Arizona, California, Maine, Massachusetts and Nevada) have now approved the “recreational use” of Marijuana. As the title of the article indicates, the “branches” of the Marijuana plant are certainly growing!

It is quite clear that after the Election of 2016, approximately a quarter of the United States population now lives in States where adult use of Marijuana is legal. Surprisingly, only one (1) State that has approved Marijuana for medical use – Arizona – rejected the recreational use of Marijuana by a vote of 52% to 48%. It is the author’s opinion that at the next Election Cycle, it is very probable that Arizona will join the parade authorizing “recreational use”.

With the rapid expanse in the use of Medical Marijuana in now twenty-seven (27) States and the District of Columbia, and the fact that recreational use is now acceptable in seven (7) States, it makes the current dichotomy between Federal and State Law (Marijuana is still prohibited by Federal Statute) not only impractical but untenable. In point of fact, under the Obama Administration, Federal Authorities largely took a “hands off policy” in enforcement of Marijuana Laws in States where Medical Marijuana had been approved. What the Trump Administration will do is still open to question, but somehow this “cross purposes” issue must end!

Regardless of the machinations on the Federal level, Employers are still facing an ever-growing dilemma in how to deal with the individual Employee who is using Marijuana for medicinal purposes. Certainly, an individual, who is a Medical Marijuana user, could not be refused to be considered for employment or terminated because he is a Medical Marijuana user. Also, in point of fact, it is conceivable that the Medical Marijuana using Employee’s underlying medical condition – the reason that they are using Medical Marijuana – could be codified as a disability under the Americans with Disabilities Act. It is interesting to note that if one were to review all the individual State Laws with regard to Medical Marijuana, there are at least five (5) chronic conditions that are listed in all of them (cancer, epilepsy, multiple sclerosis, HIV/AIDS, and “chronic pain”). At least four (4) of the listed five (5) accepted conditions in all of the States would clearly qualify as a disability and, in some cases, maybe even “chronic pain” could qualify. Obviously, Employers have to exercise great care to not trip over this Legal Liability issue.

Rather than waiting for the “shoe to fall”, Employers must take proactive steps to insure compliance with these Marijuana Laws to avoid big problems:

1. Absolutely review your Company Policies and Philosophy toward Marijuana and other controlled substances in the workplace and assure that Managers and Supervisors understand those issues.

2. Before disciplining an Employee under a No-Tolerance Drug Policy for Marijuana use, if that Employee is in a Medical Marijuana state or recreational use of Marijuana state, request the involved Employee to provide an explanation of their situation so that comprehensive data is available before a discipline and/or termination situation occurs.

3. Make sure that Job Descriptions are updated to identify the essential job responsibilities and whether or not some of these job responsibilities are safety sensitive.

4. Update all Handbooks and Manuals to reflect the current and correct Legal Policy with regard to drug testing, workplace searches and disability.

There is no doubt in the mind of the author that the “Marijuana Plant” will continue to grow and expose Employers to even greater Legal Liability.

Questions? Contact Attorney Walter J. Liszka in our Chicago office at (312) 629-9300 or by email at waliszka@wesselssherman.com

Related Posts: Can an Illinois Employer have a ZERO TOLERANCE Policy for Marijuana (Cannabis)?, Illinois Recreational Cannabis Law Is Raising Many Questions for Employers, Chicago Fair Workweek Ordinance, Recreational Cannabis Law-Beware Of Pitfalls

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Categories
Overtime

Employers Receive an 11th Hour Reprieve on DOL Minimum Salary Rule – Federal Judge Blocks Overtime Rule From Going Into Effect as Planned, On December 1st.

Employers Receive an 11th Hour Reprieve on DOL Minimum Salary Rule – Federal Judge Blocks Overtime Rule From Going Into Effect as Planned, On December 1st.

By Jennifer Adams Murphy of Wessels Sherman Joerg Liszka Laverty Seneczko P.C. posted in Overtime on Wednesday, November 23, 2016.

A federal judge in Sherman, Texas has issued a preliminary injunction which operates nation-wide to bar the Department of Labor’s minimum salary rule for certain white collar exemptions from going into effect. Employers have been bracing for drastic changes to their pay practices and exempt/non-exempt job classifications due to a DOL regulation finalized this summer and set to take effect December 1, 2016. This rule more than doubled the minimum salary required to claim certain exemptions from overtime pay. The court’s decision to block the rule, issued on November 22nd, came not a moment too soon for thousands of employers facing tough decisions before the rule was to take effect next Thursday.

In a nutshell, the court found that by raising the minimum salary for exempt status to $47,476 was so drastic that it effectively made salary the primary criterion for exempt status, overshadowing the FLSA’s intent that overtime exemptions be determined first and foremost by an employee’s job duties.

Employers that rushed to give employees raises (in some cases, significant raises) or reclassify them to nonexempt status entitled to overtime pay, well in advance of the rule’s effective date, may now be second-guessing their actions. Those employers that were preparing to either hike employees’ pay to meet the new minimum salary for exempt status, or reclassify workers to non-exempt status and pay them overtime, no longer have to implement those plans next week as a result of this court decision. The court’s injunction is only preliminary in nature and could eventually be lifted; however, given the incoming Trump administration’s differences with the outgoing Obama administration, it is now just as likely that the DOL’s regulations will never take effect. Still, employers should not assume that there will be no changes forthcoming. Already, legislation has been introduced in Congress that, while less drastic than the DOL’s measure, would provide for increases in the minimum salary necessary to certain exemptions from overtime.

With an estimated 4-6 million workers to have been impacted as of December 1st by this now blocked DOL rule, no doubt a large number of employers will be especially thankful this holiday season!

The ruling was issued in a lawsuit filed by 21 states and over 50 business organizations in a Texas district court case challenging the legality of the new Rule in State of Nevada, et al v. United States Department of Labor, 4:16-CV-00731.

As nearly everyone in the business community was aware, the new DOL Rule, which was scheduled for implementation just over one week from the court’s ruling yesterday, left many compensation plans and payroll budgets in chaos and many businesses scrambling to make payroll and workforce changes which very often resulted in undesirable changes to both businesses and their employees. The “white collar” exemptions at issue, which pertains to executive, administrative and professional employees, are analyzed under a two part test, both parts of which must be met in order for these employees to be found exempt from overtime: a “duties” test, which reviewed the work performed by the employees and a “salary” test, which as noted by the court was, until recently, low enough that most employees who met the duties test readily met the salary test as well.

Under case precedent, the DOL (like other federal agencies) has authority to interpret ambiguous statutory language enacted by Congress. One of the questions before the court was whether the DOL’s Final Rule exceeded its interpretive authority. The court found that it did and that the dramatic increase in the “salary” necessary to qualify for the executive exemption by the DOL’s Final Rule created a “de facto salary-only test.” The court noted that, “the Department estimates 4.2 million workers currently ineligible for overtime, and who fall below the minimum salary level, will automatically become eligible under the Final Rule without a change to their duties.” The court concluded that “Congress did not intend salary to categorically exclude an employee with EAP [executive, administrative and professional] duties from the exemption.” The court therefore ruled that it was not bound to defer to the interpretation of the FLSA white collar exemption by the DOL and, thus, the Final Rule “because it is contrary to the statutory test and Congress’s intent.” The Court held that, “Congress did not intend salary to categorically exclude an employee with EAP duties from the exemption.” The court also found that the automatic updating provisional provided in the Final Rule (to ensure that the minimum salary test remained at the 40% of weekly earning of full-time salaried employees) violated the Administrative Procedure Act because the updates did not provide for a notice and comment period.

It is important to keep in mind that while this ruling provides breathing room to the many employers wrestling to manage payroll costs and plans, this decision is only a preliminary ruling. The timing of the ruling, given the results of the recent election, creates an interesting situation. It seems highly likely that an appeal will be taken from this decision, which could result in a reversal of the ruling, but given the reality of this transitional political time an appeal is perhaps less certain than would otherwise be the case.

The takeaway is that the plans that your business developed to address the Final Rule do not need to be implemented on December 1st. If you have already made the changes and wish to change back to your pre-Rule compensation structure, you must give notice to your employees before the pay period in which the change back will be made. In short, if you have the plans to conform to the DOL Rule, feel free to toss them in a bottom file cabinet but don’t rip them up just yet!

For any questions or help with issues created by this turmoil, contact one of the attorneys at any of our offices:

Chicago, IL: (312) 629-9300
Davenport, IA: (563) 333-9102
Milwaukee, WI: (262) 560-9696
Minneapolis, MN: (952) 746-1700
St. Charles, IL: (630) 377-1554

Related Posts: DOL Rolls Out Proposed Overtime Revisions, Great News For Businesses: Federal Judge Strikes Down Department Of Labor Overtime Rule! , Latest Update on Court Proceedings over DOL’s Overtime Salary Regulations , Buckle Up Employers – the DOL Has Appealed the Texas Court’s Injunction That Blocked Its Controversial Overtime Regulations from Going into Effect as Planned, Making the Road Ahead Full of Uncertainty for Payroll Specialists and Employers

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Discipline

Penn State Sandusky Saga Continues to Provide Painful Lessons for Employers on What Not to Do In Response to Workplace Scandals Such as Employees Engaging in Sexual Misconduct, Harassment, etc.

Penn State Sandusky Saga Continues to Provide Painful Lessons for Employers on What Not to Do In Response to Workplace Scandals Such as Employees Engaging in Sexual Misconduct, Harassment, etc.

By James B. Sherman of Wessels Sherman Joerg Liszka Laverty Seneczko P.C. posted in Discipline on Thursday, November 17, 2016.

Already, Penn State University has paid a heavy price (millions of dollars and lost football scholarships, not to mention damage to its reputation) for allegedly sweeping under the rug scandalous conduct of convicted sex offender and former assistant football coach, Jerry Sandusky. However, while Penn State’s football team appears to have weathered the storm, the university’s problems are far from over. In October, a jury awarded former assistant coach, Mike McQueary, $7.3 million for Penn State’s mishandling of his report that he had witnessed Sandusky molesting a young boy in a locker room shower. Worse yet, on November 30th a judge tacked on another $5 million for McQueary’s whistleblower retaliation claims, separate from the already huge jury verdict. This case holds some poignant lessons for employers who may be faced with news of serious misconduct by any of their employees, whether it be sex harassment, unlawful discrimination, or criminal activity.

McQueary’s lawsuit against Penn State alleged that school officials misled him by misrepresenting that his report of Sandusky’s criminal conduct, was being taken seriously and would be investigated and handled appropriately. Instead, the former Penn State quarterback accused university administrators of engaging in a cover-up to prevent the scandal from tarnishing Penn State’s national reputation gained under former head coach, Joe Paterno. Worse yet, when the Pennsylvania Attorney General pursued perjury charges against these officials for allegedly lying under oath to a grand jury by denying that McQueary had reported Sandusky’s behavior, Penn State’s then-president publically commented that he was confident the charges would be proven groundless. In his concluding remarks to the jury at trial, McQueary’s attorney supported his claims of fraud and defamation by asking rhetorically: “How in the world can the charges be groundless unless [McQueary] lied to the grand jury about what he reported?”

Perhaps the final straw that may have added millions to the jury’s verdict, was the university administration’s decision that McQueary – a witness and not the one accused of wrongdoing – should be placed on administrative leave and banned from athletic facilities within days of the indictments being handed down. At trial, Penn State’s attorneys claimed this was done to protect McQueary in response to death threats against him. However, the jury did not appear to buy this explanation, concluding instead that McQueary was penalized and retaliated against for sticking to his testimony that seriously contradicted the university’s defense in the Sandusky scandal.

So what can employers take from Penn State’s hard-learned lessons? One key lesson, is that going into cover-up/denial mode in the face of workplace scandals can backfire horrendously. Taking sides in workplace investigations before all the facts are known, should not happen. But more subtly, just as most employers and HR professionals know not to penalize the victim (e.g. in a harassment scenario) the same holds true for employees who witness and report serious misconduct. The size of the jury’s verdict in the McQueary lawsuit speaks volumes on how dangerous it is to mistreat witnesses whose versions of the facts do not happen to support the employer’s defenses. Penn State’s gravest error may have been to side at least initially with Sandusky, or placing the preservation of its own public image over credible evidence from McQueary and other witnesses. The ongoing fallout over this scandal serves as a reminder to all that no one is beyond reproach, not top officials or even successful football coaches. Faced with bad facts, sometimes it is best to just throw in the towel and live to fight another day.

Related Posts: Lessons Learned: Effective Documentation

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Categories
Overtime

Barring a Miracle Court Injunction Next Week, the New D.O.L. Regulations on Exemptions from Overtime Pay Go Into Effect in Just Two Weeks – Thursday, December 1, 2016!

Barring a Miracle Court Injunction Next Week, the New D.O.L. Regulations on Exemptions from Overtime Pay Go Into Effect in Just Two Weeks – Thursday, December 1, 2016!

By James B. Sherman of Wessels Sherman Joerg Liszka Laverty Seneczko P.C. posted in Overtime on Thursday, November 17, 2016.

As of December 1st most employees whose annualized salaries are less than $47,476, will be entitled to overtime pay even though their job duties would otherwise qualify for an exemption as executive, administrative or professional. A federal court in Texas is expected to rule next Tuesday in a lawsuit brought by employer groups seeking to enjoin the DOL’s new rule from going into effect on the 1st; however, based on previous rulings in similar suits employers can hardly count on a court ordered reprieve. Consequently, in the final days before sweeping changes are mandated by the DOL’s deadline to more than double the minimum salary necessary to qualify for any of the so-called “white-collar” exemptions, employers are scrambling (and our phones are ringing). Because so many employers remain unprepared for the sweeping changes (and exposure to lawsuits and liability) coming just around the corner, this article will identify some common misunderstandings that are leaving thousands of employers exposed – see if any apply to you!

1. Many employers continue to believe that if an employee is paid a salary, the employee is
“exempt”
and need not be paid 1 ½ times the regular rate pay in overtime for hours worked in excess of 40 in any workweek. This assumption is just dead wrong! To be exempt from overtime an employee must meet all three of the following: 1) must perform exempt job duties; 2) must be paid a salary; and, as of December 1st 3) that salary must be at least $47,476/year ($913/week). Failure to satisfy any one of these three requirements makes the employee non-exempt and entitled to overtime pay.

2. Many employers are mistakenly relying on other, non-salary forms of compensation to meet the new minimum salary. We often hear employers say they are not concerned with the Department of Labor’s new minimum salary, even though it doubles the current minimum, because they “pay” or “compensate” their exempt employees well beyond $47,476 per year. The problem is that, with one very limited exception, only pay in the form of a salary counts toward the new minimum set by the D.O.L.

The only exception is that bonuses, incentive pay, or commissions may be added to an employee’s salary towards the new minimum, only if they are non-discretionary (i.e. guaranteed by formula or otherwise) and then, they can comprise no more than 10% of the new minimum salary. This means that 90% or more of the new minimum salary must be in the form of a salary that is paid regardless of hours worked. Doing the simple math, this means that no more than $4,748 of the new minimum can come from bonuses, etc. For example, even if an employee makes $100,000 in total compensation, he/she will not be exempt from overtime under any of the white-collar jobs unless, at a minimum, $42,728 of that compensation is paid as a salary and any additional compensation must be non-discretionary and meets one of the limited forms acceptable under the new rule. Because these nuances are frequently misunderstood, any employer that plans on relying on bonuses or other compensation to meet the new minimum salary is well-advised to consult with knowledgeable legal counsel to determine if it is allowed.

3. A significant number of employers assume that converting exempt employees to non-exempt employees because they will not meet the new minimum salary, can be easily done. Oversimplification of what is entailed with converting exempt employees to non-exempt, is a recipe for disaster! This requires far more than a simple change in payroll. Most notably, affected employees who in the past have never had to track their hours worked, must begin doing so as of December 1, 2016. But many employees who perform exempt duties do things that blur the lines between compensable and non-compensable work time, much more so than traditional hourly workers. What about travel time? Attending trade or civic events that benefit the company? Checking/replying to emails, etc.? Addressing these various issues can be complicated and take time, and there is barely any time left before the new rules go into effect on December 1st, 2016.

4. One potential positive from the new DOL Overtime Regulation, is that the changes going into effect December 1, 2016, present as good a time as any to “fix” misclassified employees who do not clearly meet the required duties to be exempt from overtime pay. With millions of workers possibly being reclassified from exempt to nonexempt as a result of the new minimum salary rule, including employees whose duties are more appropriately classified as nonexempt in those who are reclassified, could potentially drawing less attention to the change.

On a final note, there are several ways to convert compensation for employees who must be “reclassified” from exempt to non-exempt status. While changing pay from salary to hourly pay is permissible, it may not be the best approach for many employers, or employees. Without careful planning, employers could wind up paying more in 2017 than if they had increased some salaries by many thousands of dollars to meet the new minimum set by the D.O.L. So, with just days left to plan, employers who have yet to address these issues or who have mistakenly thought they were easily addressed, may be in for a rude awakening.

Related Posts: DOL Rolls Out Proposed Overtime Revisions, Great News For Businesses: Federal Judge Strikes Down Department Of Labor Overtime Rule! , Latest Update on Court Proceedings over DOL’s Overtime Salary Regulations , Buckle Up Employers – the DOL Has Appealed the Texas Court’s Injunction That Blocked Its Controversial Overtime Regulations from Going into Effect as Planned, Making the Road Ahead Full of Uncertainty for Payroll Specialists and Employers

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