New Pennsylvania Legislation Allows Payment of Wages by Payroll Debit Cards

Employers in Pennsylvania will be able to pay employee wages using payroll debit cards under an amendment to the banking code signed by Governor Tom Wolf on November 4, 2016. The new legislation goes into effect 180 days following the signing, on May 4, 2017.

An alternative to payment of wages by direct deposits or payroll checks, a payroll debit card is a prepaid card onto which an employer can load an employee’s wages each payday. These cards allow employers to pay employees who do not have bank accounts without requiring the employee to pay a fee to access the money. Once wages are loaded onto the cards, the cards can be used where debit cards are accepted. With most cards, employees also can withdraw the money as cash from an ATM.

Under the amendment, employers are permitted to use payroll debit cards under certain conditions. For example, payroll debit cards must be optional for employees, employers may not require employees to accept payment by payroll debit cards. Further, employers that decide to use payroll debit cards must comply with certain notice and authorization requirements proscribed by the statute.

The amendment places certain requirements on the card itself. For example, the card must allow one free withdrawal of wages each pay period and one in-network ATM withdrawal at least weekly. Employees using the card also must be able to check the card’s balance electronically or by telephone without a fee charged to the employee. In addition, the card must not impose fees for certain transactions, including issuance of the initial card and one replacement card per calendar year, transfer of wages to the card itself, and for non-use of the card for a period of less than 12 months.

Please contact Jackson Lewis for any questions about this and other workplace developments.


District Court Issues Nationwide Injunction Blocking DOL Final Rule

In a stinging defeat to the Obama Administration, a district court in Texas today issued a nationwide preliminary injunction blocking the DOL’s Final Rule which seeks to raise the required salary level to qualify for the white collar exemptions. An article discussing the decision in more detail and the ramifications for employers will be posted on our website.

Fight for $15 Plans Protests, ‘Civil Disobedience’ on November 29

*Philip B. Rosen and Howard M. Bloom contributed to this article.

Fight for $15, the four-year-old movement to secure a minimum wage of $15 an hour, has announced plans for demonstrations, strikes, and protests in 340 cities across the country on November 29.  Tens of thousands of employees are expected to participate.  The current federal minimum wage is $7.25 an hour.  Some state and local laws provide for higher minimum wages than the federally mandated rate.

According to The Hill, strikes are planned by baggage handlers at Chicago O’Hare International Airport and by fast food workers across the country. Protests also will take place at Los Angeles International Airport, Newark International Airport, and 20 other airports in major cities.  According to the website, baggage handlers, fast-food cooks, home care workers, child care teachers, and graduate assistants will participate. The movement demands “$15 and union rights, no deportations, an end to the police killings of black people, and politicians keep their hands off Americans’ health care coverage.”

During a November 21 conference call, spokespersons for the movement claimed the planned protests are in response to President-elect Donald Trump’s victory in the recent presidential election.

Under the National Labor Relations Act, employees have the right to engage in group activity for the purposes of “mutual aid and protection.”  Thus, regardless of whether a union is involved, if two or more employees acting in concert walk off the job to protest work conditions or enforce demands relating to the terms of their employment, the walk-out, or strike, generally is protected concerted activity under the Act.  (However, short, intermittent work stoppages might not be.)  Under these circumstances, it would be unlawful to discipline or discharge (or otherwise disadvantage) employees for walking off the job.  It also means that unless the employees have been permanently replaced, the strikers are entitled to be returned to their jobs when they make an unconditional offer to do so.

What can employers do? There are several actions available for employers who are faced with this kind of activity.  For a detailed explanation of those options and for more about the history of Fight for $15, see our November 2015 article, ‘Fight for $15’ Walk-Outs and Protests Continue; Are You Prepared for November 10?


Did the DOL Salary Basis Regulations Just Get Trumped?

Jackson Lewis Principal Eric Magnus contributed to this post.

The U.S. Department of Labor regulations raising the required salary level for the white collar exemptions (executive, administrative, and professional) under the Fair Labor Standards Act are scheduled to become effective December 1, 2016.  Since the results of Tuesday’s election, some employers are considering whether to delay any scheduled changes in the hope that the Trump administration and the Republican Congress might repeal the regulation.  It is unclear at this time whether the Trump administration will make changes to the new rules.  Regardless of how the new administration approaches the new regulations, however, there will be a period of time beginning on December 1 during which the $47,476 salary will be the law and an employer may be subject to lawsuits by employees for failing to make the change.  To avoid this risk, employers are taking steps to ensure compliance with the new regulations in advance of the December 1 effective date.

If the administration does take action, the regulations might be repealed entirely or “repealed and replaced” (a la Obamacare) with more gradual increases to the salary level and with exemptions for small employers or non-profits.  But this is all speculation.  If the salary level is lowered in the future, any salary reductions, of course, would create employee-relations issues which may make for a significant deterrent to reducing salaries for current employees whose salaries were previously increased as a result of the new regulations.

Two lawsuits filed in a Texas District Court by several States and various Chambers of Commerce against the Department of Labor seeking to block the rule are also pending.  A decision relating to an injunction is likely to occur before the December 1, 2016 effective date.  If the lawsuit is successful and an injunction is  issued, a Trump administration may decide not to defend the regulation on appeal. Stay tuned for an update following the November 16 hearing.

Legislation To Delay Overtime Rule Passed By The House Of Representatives

The U.S. House of Representatives yesterday voted 246 to 177, largely along party lines, in favor of legislation which would delay the rule’s effective date by six months, from December 1, 2016, to June 1, 2017.  Prior to the anticipated late night vote on the bill in the House, Senator James Lankford (R-Okla.) introduced the legislation in the Senate, requesting “delay of this rule to give the economy more time to prepare for it.”  In a statement, the White House promised to veto the bill, claiming the “real goal” of the bill was to “delay and then deny overtime pay to workers.”

Given that the legislation does not appear to have sufficient votes to override President Obama’s likely veto, employers should prepare for the changes to the exemptions to ensure they are compliant by December 1, 2016.

Legislation Introduced To Delay Overtime Rule

Following a pair of lawsuits aimed at blocking the Labor Department’s “white collar” overtime rule, House Subcommittee on Workforce Protections Chair Tim Walberg (R-Michigan) introduced legislation which would delay the rule’s effective date by six months, from December 1, 2016, to June 1, 2017.  The proposed legislation, entitled The Regulatory Relief for Small Businesses, Schools, and Nonprofits Act (H.R. 6094), currently has 48 cosponsors – 47 Republicans and 1 Democrat.  According to the bill’s sponsors, absent congressional action, on December 1, 2016, “drastic changes to federal overtime policies will take effect, resulting in harmful consequences for workers, small businesses, nonprofit organizations, and colleges and universities.”

The legislation does not make any substantive changes to the Final Rule; it only delays its effective date for six months, likely with the hope that a new Congress might pass legislation that would permanently block the rule.  But even if this legislation passed, President Obama likely would veto it.  Given the short time before the effective date and its unlikely passage during President Obama’s term, employers should prepare for the changes to the exemptions to ensure they are compliant by December 1, 2016.

States and Business Groups File Separate Challenges To OT Rule

The anticipated legal challenges to the Department of Labor’s Final Rule regarding the salary level for white collar exempt employees were lodged yesterday through two separate lawsuits filed in the Eastern District of Texas.  State of Nevada et al v. United States Department of Labor et al, E.D. Texas 16-CV-731; Plano Chamber of Commerce et al v. Perez et al, E.D. Texas 16-CV-732.  In the first, twenty-one states challenge most aspects of the Final Rule, including its application to the states themselves.  In the latter, the U.S. Chamber of Commerce and other business groups attack the new salary level as “arbitrary,” and also challenge the Rule’s 10% cap on the use of non-discretionary incentive compensation to satisfy the salary level requirement.  Full coverage is available here.

Federal Court In Florida Is Latest To Reject DOL Regulation, Finds FLSA Does Not Require That Employees Receiving Full Minimum Wage Retain All Tips

While Department of Labor regulations interpreting the FLSA remain the primary source of employer guidance regarding the Act’s requirements, they are not necessarily the final word on what federal wage law requires. This is so even where they have been subject to “notice and comment,” triggering a higher level of judicial deference.  A federal court in Florida is the latest to highlight this at-times confusing reality, joining a growing line of authority holding that an employer does not have to ensure tipped employees retain all of their tips if the company is not using the employee’s tips to satisfy part of the minimum wage pursuant to the FLSA’s “tip credit” provision, 29 U.S.C. § 203(m). See Aguila v. Corporate Caterers II, Inc., 2016 U.S. Dist. LEXIS 104962 (S.D. Fla. Aug. 9, 2016).  In Aguila, the plaintiff delivery drivers sued defendant catering company under the FLSA, claiming that the company “retained some or all of these tips.”  The court granted the defendant’s motion to dismiss the plaintiffs’ claims, holding that the provisions of Section 3(m) of the FLSA (which require, among other things, that tipped employees paid a tip credit rate retain all of their tips) did not apply to plaintiffs because the plaintiffs did not allege that the defendant paid them below the full minimum wage (i.e., that the employer used some or all of their tips to satisfy the minimum wage).

Citing, among other authority, the recent decision of another judge within the Eleventh Circuit, the Court in Aguila noted that “under a consistent body of case law, courts have interpreted § 203(m) to prohibit an employer from retaining an employee’s tips only if the employer pays the tipped employee less than the federal minimum wage.”  The Aguila court joined a number of federal courts in rejecting the recent position taken by the United Stated Department of Labor (“DOL”) on this issue – a position set forth in recently-implemented regulations – and the Ninth Circuit’s decision in Oregon Rest. and Lodging Ass’n v. Perez, 816 F.3d 1080 (9th Cir. 2016) which adopted the DOL’s position.  Specifically, the Aguila court noted that it “disagrees with the flawed reasoning in Perez and finds that the DOL was without authority to address this issue” because the FLSA’s “plain and unambiguous language” expressly ties the requirement that employees retain all tips to the taking of a tip credit.

The law governing tip practices under the FLSA (as well as numerous state laws regulating gratuities) continues to develop, and employers of tipped workers in any industry permitting tipping must inform their business and employment practices by reference to current law in their jurisdictions.

U.S. Department of Labor Issues Revised FLSA Poster

The U.S. Department of Labor has issued a new FLSA poster, available for download here.  Covered employers should replace old posters with the Department’s new versions.  Employers should periodically review their compliance with FLSA and state law posting and notice requirements, particularly as related to tipped workers.

New Arizona Law Permits Parties To Establish Presumption Of Contractor Status Through Writing

As covered at length here, Arizona has enacted a new law effective August 6, 2016 allowing businesses and service providers seeking to enter into an independent contractor relationship to execute a “declaration of independent business status.”  A declaration complying with the statute creates a presumption of proper classification of the relationship between the parties as an independent contractor relationship.