Workplace Labor Update J U N E 2 0 0 3 In This Issue: Proposed - PDF document

Workplace Labor Update J U N E 2 0 0 3 In This Issue: Proposed Regulations May Define How Overtime Exemptions Are Analyzed……………………………………………….1 Understanding the Impact of War on the Workforce: Employers Should Familiarize Themselves with Requirements of USERRA………………………..…………………………………………………………...2 Maryland High Court: No Wrongful Discharge Exception For Seeking Advice From Counsel..……………………………3 Proposed Regulations May Define How Overtime Exemptions Are Analyzed By Darryl L. Franklin On March 31, 2003, the United States Department of Labor (DOL) published proposed revisions to the Fair Labor Standards Act (FLSA) regulations. The FLSA proposed revisions, if implemented, would re-define the way the current overtime exemptions for executive, administrative and professional employees are analyzed. According to the DOL, the proposed regulations are necessary to update the current regulations, which have remained unchanged for the most part since 1949, and to make it easier for employees and employers to determine which employees are eligible to receive overtime pay. If adopted, the proposed regulations would make several key changes to existing regulations. For example, the proposed regulations would alter the “duty” test for administrative, executive and professional employees who are exempt from overtime pay. In addition, the proposed regulations would eliminate all percentage limitations for all categories of employees ( i.e ., percentage of work doing non-exempt versus exempt work). Under the proposed changes, the following tests would be applied: Administrative Employee The proposed regulations retain the requirement that an exempt administrative employee have a “primary duty” of “performing office or non-manual work related to the management or general business operations of the employer or the employer’s customers.” However, the proposed regulations replaced the confusing and hard to apply requirement that the employee exercise “discretion and independent judgment” with the requirement that he/she holds a “position of responsibility.” In order for an employee to hold a “position of responsibility,” he/she must either: (1) perform work of substantial importance; or (2) employ a high level of skill or training. Executive Employee Under the proposed regulations, an exempt executive employee must: (1) have a primary duty of managing the enterprise in which the employee is employed or of a customarily recognized department or subdivision thereof; (2) customarily and regularly direct work of two or more other employees; and (3) have the authority to hire or fire other employees or have particular weight given to suggestions and recommendations as to the hiring, firing, advancement, promotion or any other change of status of other employees. Similar to the administrative exemption, the proposed regulations delete all references to the requirement that the employee exercise “discretion and independent judgment.” V A L U E A D D E D , V A L U E S D R I V E N. S M

W O R K P L A C E L A B O R U P D A T E J U N E 2 0 0 3 2 Professional Employees For professional employees, the proposed regulations continue to recognize as exempt “learned professionals” who have earned an advanced degree in a specialized area of knowledge, such as doctors, lawyers and engineers. 1 However, the proposed regulations broaden the number of employees who could potentially qualify under this exemption by including an employee with an advanced type of knowledge acquired by an equivalent combination of intellectual instruction and work experience. Like the administrative and executive exemptions, the amendments eliminate the phrase “discretion and independent judgment” in the professional exemption. 2 In addition, the proposed regulations would increase the minimum salary for employees exempt from overtime payments from $155 per week to $425 per week. Finally, the proposed changes would allow employers to take deductions from an exempt employee’s salary for full day absences as a result of suspensions imposed by the employer against the employee for disciplinary reasons, such as sexual harassment or other violations of workplace rules. (The proposed regulations leave unchanged the current rule prohibiting deductions for partial day absences.) It is important to note that these proposed regulations are not final. Rather, DOL is currently soliciting comments to their proposed regulations. It is anticipated that representatives of organized labor and employee advocacy groups will submit extensive comments challenging and criticizing the proposed amendments. Understanding the Impact of War on the Workforce: Employers Should Familiarize Themselves with Requirements of USERRA By Connie N. Bertram In light of the recent military activity in Iraq, the activation of thousands of reservists and the deployment of thousands of soldiers to the Middle East and around the world, it is critical that employers understand their obligations under the Uniformed Services Employment and Reemployment Rights Act (USERRA), 38 U.S.C. § 4301, to provide job and benefit protection rights to employees. Employers will be well-served by familiarizing themselves with this little-known, but important, Act and its comprehensive job-protection provisions. USERRA applies to all employers, regardless of size. Under the Act, employers are prohibited from discriminating against employees and applicants who are members of or apply to be members of the armed services or who perform or apply to perform military duty. The Act also prohibits retaliation against any employee or applicant for exercising his or her right to participate in military service, testifying or making a statement in connection with any proceeding under the Act, or participating in an investigation under the Act. Under USERRA, employers must allow military leaves of absence totaling up to five years to any full or part-time employee who voluntarily or involuntarily enters active duty or training in the Armed Forces, including the Air National Guard, the Army National Guard, and the commissioned corps of the Public Health Service. To be entitled to coverage under USERRA, an employee must provide advance written or oral notice to his or her employer of service obligations. An employee, however, is not required to provide notice if military necessity precludes it or it is impossible or unreasonable. Employers have an obligation to reinstate employees when they complete military leave covered by USERRA. The time period within which an employee must seek reinstatement depends on the length of the military service: 1 In addition, the proposed regulations would create a distinct and separate section for “computer” employees. This section would consolidate all of the current regulatory guidance on computer occupations. 2 With respect to “outside sales” employees, the requirements for exemption from overtime payments would remain largely unchanged. V A L U E A D D E D , V A L U E S D R I V E N. S M