Do you know? The FLSA’s exemptions for salespeople

Do you know? The FLSA has two different exemptions that could cover salespeople – the outside sales employee exemption and the commissioned retail employee exemption. If an employee qualifies for either of these exemptions, that employee is not owed overtime for any hours worked in excess of 40 in any given work week.

To qualify for the outside sales employee exemption, both of the following must be met:

1. The employee’s primary duty must either be making sales, or obtaining orders or contracts for services or for the use of facilities for which a consideration will be paid by the client or customer; and

2. The employee must be customarily and regularly engaged away from the employer’s place or places of business.

Because sales employees are often commissioned (at least in part), there is no salary requirement with this exemption.

Outside sales typically do not include sales made by mail, telephone, or the Internet. For example, this exemption does not cover telemarketers.

To quality for the commissioned retail employee exemption, all three of the following requirements must be met:

1. The employee must be employed by a retail or service establishment;

2. The employee’s regular rate of pay must exceed one and one-half times the applicable minimum wage; and

3. More than half of the employee’s earnings must be in form of commissions.

For information on other FLSA exemptions, see the following:

• Do you know? The FLSA’s Administrative Exemption

• Do you know? The FLSA’s Executive Exemption

Supreme Court rules that retaliation includes participating in internal investigations

In a unanimous 9-0 decision, the U.S. Supreme Court held today that Title VII’s anti-retaliation provision covers employees who answer questions during employers’ internal investigations. The case is Crawford v. Metropolitan Gov’t of Nashville.

The case involved the termination of a 30-year employee who answered her employer’s questions during its investigation into a co-worker’s allegations of harassment against a different employee.

The Court found Crawford’s activity to be protected by the anti-retaliation provision’s “opposition” clause:

[N]othing in the statute requires a freakish rule protecting an employee who reports discrimination on her own initiative but not one who reports the same discrimination in the same words when her boss asks a question….

If it were clear law that an employee who reported discrimination in answering an employer’s questions could be penalized with no remedy, prudent employees would have a good reason to keep quiet about Title VII offenses against themselves or against others…. The appeals court’s rule would thus create a real dilemma for any knowledgeable employee in a hostile work environment if the boss took steps to assure a defense under our cases. If the employee reported discrimination in response to the enquiries, the employer might well be free to penalize her for speaking up. But if she kept quiet about the discrimination and later filed a Title VII claim, the employer might well escape liability, arguing that it “exercised reasonable care to prevent and correct [any discrimination] promptly” but “the plaintiff employee unreasonably failed to take advantage of … preventive or corrective opportunities provided by the employer.” Nothing in the statute’s precedent supports this catch-22.

Wile the Court went to great lengths to ground its decision in the statutory definition of “opposition,” this opinion really is policy driven. The Court is sending a clear message that it highly values internal workplace investigations. The message to employers is two-fold:

1. If an employee complains of discrimination or retaliation, investigate

   promptly and thoroughly; and

2. The investigatory process should include clear assurances to third-party witnesses that they will not be retaliated against for participating in the investigation.

Reverse age discrimination should not be a concern in layoffs

Last week, BusinessWeek ran the following headline: Employers Avoid Axing Oldies but Goodies. The crux of the story is that the current wave of layoffs is hitting younger employees much harder than in the past. Seniority is being protected because of legal concerns in laying off the over-40 set, and because of the need to keep experienced people in place to help navigate these difficult times. According to the article, hard numbers back this trend:

• Unemployment claims for those 55 and older jumped to 4.9% in December 2008, a 1.8% rise over the prior year.
• In contrast, for those aged 25-54 the rate climbed to 6.3% in December, a 2.3% jump from December 2007.
• Meanwhile, there are 2.8 million less people ages 25-54 employed in December 2008 as compared to December 2007.
• In contrast, there are 878,000 more employees age 55 and over employed this year as compared to last year.

Yet, the article ends with the following word of caution:

Still, companies must tread carefully to avoid showing favoritism based on age. They could wind up facing reverse-discrimination suits from younger workers who feel targeted.

Nothing could be further from the truth. In General Dynamics Land Systems v. Cline (2004), the U.S. Supreme Court conclusively ended the debate over whether one can bring a claim for reverse age discrimination. In that case, the employer provided retiree health benefits only to those people who were over age 50. 196 employees ages 40-49 claimed that since the contract expressly excluded employees between the ages of 40 and 49, providing benefits only to retirees 50 and over was illegal age discrimination. Thus, the Court was asked to decided if the ADEA prohibits “reverse discrimination” against workers over 40 by providing greater benefits to workers over 50 than to younger workers who are still over 40.

The Court rejected the notion of “reverse age discrimination.” The ADEA’s “text, structure, purpose, history, and relationship to other federal statutes show that the statute does not mean to stop an employer from favoring an older employee over a younger one.” According to the Court, the ADEA is “a remedy for unfair preference based on relative youth, leaving complaints of the relatively young outside the statutory concern.”

In structuring any layoff, it is always wise to verify that the affected group does not contain a disproportionate percentage of “protected group” employees. In conducting that analysis, though, one should not be concerned about whether the layoff disproportionately favors older workers over younger workers.

Ledbetter passes Senate – President’s signature is next

It’s looking like the Lilly Ledbetter Fair Pay Act will be the first piece of legislation President Obama will sign into law. The Washington Post reports that yesterday it passed the Senate by a vote of 61-36. The Washington Post goes on to quote Lilly Ledbetter, who said that she had spoken to the President following the Senate vote, and that “he has assured me that he will see me in the White House, hopefully in just a few days.”

For more the Ledbetter Act and its implications for employers, see Ledbetter Fair Pay Act likely to be first employment legislation of the Obama Presidency and Are we overreacting to Ledbetter?

WIRTW #63

If you check out only one other link this week, click over the Connecticut Employment Law Blog, where Dan Schwartz writes an Inauguration Day letter to President Obama on what he hopes to see for employers over the next four years.

In other Inauguration-related news, the Delaware Employment Law Blog shares some thoughts on work-life balance and Michelle Obama.

The Evil HR Lady answers a question on the pro-rating of exempt employees’ salaries based on the number of hours they work each week. If an employer prorates a salary based on the number of hours worked, the employee almost certainly isn’t exempt.

George’s Employment Blawg points out some common employment application mistakes.

The Word on Employment Law with John Phillips, with a nod to Execupundit, lists the top 7 reasons employees don’t go to HR. For what it’s worth, I’d re-rank the top 2 as fear of retaliation and fear of company bias.

LawMemo Employment Law Blog reports on the Supreme Court’s decision in Locke v. Karass, which held that a local union can lawfully charge nonmembers for national litigation expenses.

More lessons from children’s lit: Dr. Seuss

As either my wife or I do every night, our daughter was put to bed last night with a book (or four). On the list last night was one of my all time favorites, Green Eggs & Ham. As I was reading I got to thinking that given the adult themes Dr. Seuss weaved into his books, there must be some lessons for employers to take from his works. I came up with the following:

Horton Hears a Who teaches that employers should not ignore complaints by employees. If an employee raises a concern about harassment, it is best for the company to take the complaint seriously, investigate, and take whatever corrective action, if any, is necessary. It is far better to investigate and conclude that nothing is there than to ignore the complaint and have it blossom into a lawsuit.

And to Think That I Saw It on Mulberry Street, Dr. Seuss’s first children’s book, is about a boy who dreams up a wild story to tell his father when he gets some from a walk down Mulberry Street, but ultimately decides to simply tell him what he saw. For employers, the lesson is to deal openly and honestly with employees. Gossip runs rampant in every workplace, and it is better to quell rumors than to keep truths or even lie to employees. This lesson is especially relevant with the silent killer of card check union recognition potentially looming on the horizon.

The Cat in the Hat teaches that employers must know what it is the right time to cut bait with a troublesome employee.

Yertle the Turtle involves the king of the pond who commands the other turtles to stack themselves beneath him so that he can see, ignoring the turtles’ pleas for rest. The lesson for employers is to treat employees fairly.

The Sneetches, about shunning those who look different, teaches an important lesson about discrimination.

Finally, Fox in Sox teaches that sometimes you just have to have a little fun.

Unions should not bet on the EFCA as a sure thing

As President Obama was taking the oath of office, inside some office in some executive office building in Washington D.C., someone flipped a switch and turned on the new website for the White House. It is drastically different, as President Obama is becoming the first president to fully embrace the internet as a viable means to communicate with the public. It has all of the typical history, civics, and biographical information one has come to expect from the White House’s website. However, it also has extensive information on President Obama’s agenda for the next four years. You’ll find information on suggested changes to the FMLA and paid sick leave, proposed new laws to protect individuals from discrimination based on sexual orientation and gender identity, and his plan to stimulate the economy and create jobs.

What you will not find, though, is any mention of the Employee Free Choice Act. While it was featured prominently on Change.gov, the President’s transition website, it has been completely scrubbed from Whitehouse.gov. Perhaps this recent interview of President Obama by the Washington Post sheds some light on this curious omission:

Q: The Employee Free Choice Act - a timing question and a substance question: in terms of timing how quickly would you like to see it brought up? Would you like to see it brought up in your first year? In terms of substance, the bills that you talked about in your floor statement on the Employee Free Choice Act problems with bullying of [inaudible] people want to join unions. Is card check the only solution? Or are you open to considering other solutions that might shorten the time?

Obama: I think I think that is a fair question and a good one.

Here's my basic principal that wages and incomes have flatlined over the last decade. That part of that has to do with forces that are beyond everybody's control: globalization, technology and so forth. Part of it has to do with workers have very little leverage and that larger and larger shares of our productivity go to the top and not to the middle or the bottom. I think unions serve an important role in that. I think that the way the Bush Administration managed the Department of Labor, the NLRB, and a host of other aspects of labor management relations put the thumb too heavily against unions. I want to lift that thumb. There are going to be steps that we can take other than the Employee Free Choice Act that will make a difference there.

I think the basic principal of making it easier and fairer for workers who want to join a union, join a union is important. And the basic outline of the Employee Fair Choice are ones that I agree with. But I will certainly listen to all parties involved including from labor and the business community which I know considers this to be the devil incarnate. I will listen to parties involved and see if there are ways that we can bring those parties together and restore some balance.

You know, now if the business community's argument against the Employee Free Choice Act is simply that it will make it easier for people to join unions and we think that is damaging to the economy then they probably won't get too far with me. If their arguments are we think there are more elegant ways of doing this or here are some modifications or tweaks to the general concept that we would like to see. Then I think that's a conversation that not only myself but folks in labor would be willing to have. But, so that's the general approach that I am interested in taking. But in terms of time table, if we are losing half a million jobs a month then there are no jobs to unionize. So my focus first is on those key economic priority items that I just mentioned.

To read the tea leaves, no one should think that President Obama has softened his position on the EFCA as a matter of policy. He was an early supporter of it as a Senator, and it is fair to conclude that the ascension to the Presidency has not altered his ideology. However, he is a shrewd politician, and he must know: 1) that given the current state of the economy the timing is not right for the EFCA, and 2) the EFCA in its current form is too divisive to ever come out of Congress. In other words, the EFCA is off the table for now, but once the economic ship has been righted, look for this administration to push for a compromised, less controversial, Employee Free Choice Act.

[Hat tip: Connecticut Employment Law Blog and Workplace Prof Blog]

Reminder: It’s not too late to RSVP for KJK’s Breakfast Briefing

There is still time to RSVP for KJK’s inaugural Employment Law Breakfast Briefing: The Top 10 Labor & Employment Law Issues to Face Your Business in 2009. We’ll discuss topics such as the recent ADA Amendments, the new FMLA regulations, legislation President Obama is likely to sign in 2009, the crush of wage and hour litigation, and handling employee layoffs and terminations in a difficult economy. Help prepare your organization for these issues by spending a couple of hours of your morning with KJK’s Labor and Employment Law attorneys.

The seminar will be held Wednesday, January 28, 2009, at The Club at Key Center located at 127 Public Square, Cleveland, OH 44114. The agenda is as follows:

Presenters: Rob Gilmore, Alan Rauss, and Jon Hyman

Agenda
8:00-8:30 Breakfast
8:30-9:30 Presentation
9:30-10:00 Q&A

The event is free and parking will be provided.

If you are interested in attending, or for more information, please contact Andrea Hill, (216) 736-7234 or ach@kjk.com, by January 23, 2009.

Do you know? Ohio’s jury duty rules for employers

Do you know? Ohio has specific rules that govern how employers handle employees who are summoned for jury duty – Ohio Revised Code 2313.18.

Rule number 1 is simple. It is illegal for an employer to discharge, threaten to discharge, or take any disciplinary action that could lead to the discharge of any permanent employee summoned to serve as a juror, provided that the employee gives reasonable notice to the employer of the summons prior to the commencement of the employee’s service as a juror and if the employee is absent from employment because of the actual jury service.

Rule number 2, though, is counter-intuitive. It is illegal for an employer to require or even request an employee to use vacation time, or sick leave, or other paid time off for time spent responding to a jury duty summons, time spent participating in the jury selection process, or time spent actually serving on a jury.

Rule number 3 provides some relief for small businesses. If a company with 25 or fewer full-time employees (or their equivalent) has more than one employee summoned for jury duty within the same court term, the court must postpone and reschedule the service of the later-summoned employees.

Companies should take these rules seriously. Violations can be punished as contempt of court, and employees terminated in violation of this statute could pursue a wrongful discharge claim.

Drafting an appropriate social networking policy

According to a recent report published by the Pew Internet & American Life Project, the percentage of adults who use social networking sights such as MySpace, Facebook, and LinkedIn has more than quadrupled in the past four years – from 8% in 2005 to 35% in 2008. By age, the stats break down as follows:

• 18 – 24: 75%
• 25 – 34: 57%
• 35 – 44: 30%
• 45 – 54: 19%
• 55 – 64: 10%
• 65 & over: 7%

For American businesses, these numbers mean that a large quantity of workers have profiles on any number of social networking sights (yours truly included). They also mean that if your internet or technology policy does not cover the appropriate use of social networking and blogging you are leaving yourself potentially exposed for abuse, embarrassment, and potential liability. 

Let me offer a few thoughts on putting together a policy to cover employees’ use of social networking.

1. A blanket prohibition does not make sense. I am not a fan of draconian policies. They cause more harm than good. They are bad for morale, drive away quality employees, beg for violations, and hamstring employers into making personnel decision they might not otherwise want to make when the policy is violated. If the reality is that a large chunk of employees are social networking, employers should embrace this medium within reason.

2. Employees need to understand that with the ability to use social networking comes responsibility. If a profile can link someone to their place of employment, the employee cannot post anything that could potentially embarrass or otherwise reflect poorly on his or her employer. This policy is one of common sense. Posting where you went to college is acceptable, posting pictures of yourself drunk while in college is not.

3. Use while at work should be governed by a company’s general internet protocol. If a company permits limited personal use at work (which most should), then the same ability should be extended to employees’ social networking activities.

These types of policies are governed by one guiding principle – treat employees like adults and assume that they will return the favor until they prove otherwise.

[Hat tip: Delaware Employment Law Blog]

WIRTW #62

What are my contemporaries writing about this week? Let’s take a look.

George’s Employment Blawg and the National Law Journal both share their thought on whether recession-era juries will be good or bad to employers.

The HR Capitalist gives his opinion on whether fighting labor unions was good or bad for Starbuck’s corporate image.

The Pennsylvania Labor & Employment Blog provides a handy HR compliance checklist for the new year.

The Delaware Employment Law Blog continues its back to school course on the FLSA with a lesson on recordkeeping.

The Employment Law Blog answers why severance agreements always advise the employee to consult with an attorney.

Workplace Privacy Counsel breaks down privacy concerns in the new FMLA regulations.

KnowHR Blog reminds everyone that confidentiality is key during layoffs.

The Washington Labor & Employment Wire reports on two recent DOL opinion letters on wage and hour issues for tipped employees.

Human Rights in the Workplace discusses an interesting sex harassment case from our neighbors up north.

Tomorrow is “FMLA Day.” Is your company ready?

Tomorrow, January 16, is FMLA Day – the day the new FMLA regulations take effect. If a business is covered by the FMLA (it employs 50 or more employees for each working day during each of 20 or more calendar workweeks in the current or preceding calendar year), there are certain steps it should be taking to get ready for the changes.

1. Post the Revised FMLA Poster.

2. Distribute a revised FMLA Policy or make appropriate handbook amendments.

3. Take out of circulation old FMLA forms (Employer Response to Employee Request for FMLA Leave and Certification of Health Care Provider, for example), which are no longer legal to use.

4. Put into use the new form to notify employees of their FMLA eligibility, to be used within five business days of an employee’s request for FMLA leave or the employer’s other notice of the need for leave.

5. Put into use the two new medical certification forms, one for an employee’s own serious health condition, and the other for an employee’s family member’s serious health condition.

6. Put into use the new FMLA designation notice, which must be given to an employee within five business days after an employer has received sufficient information to determine whether an employee’s leave is covered by the FMLA.

7. Make sure that the appropriate forms are being used for military family leave – one for the certification of qualifying exigency and one the certification for a serious injury or illness of a covered servicemember.

8. Train all HR personnel, managers, and supervisors on the mechanics of the new FMLA regulations.

For more information on the key FMLA changes, you can review these earlier posts:

• Summary of new FMLA Regulations: 10 Key Changes.

• Summary of new FMLA Regulations: Military Family Leave.

• New FMLA Regulations: What do they mean to notice and designation obligations to employees?

Hooters sued for not hiring men

An alleged rejected male job applicant for a food server position at a Corpus Christi, Texas, Hooters has filed a class action sex discrimination lawsuit against the restaurant chain. He claims that Hooters refuses to even consider men for food server positions. According to the lawsuit:

Hooters attempts to circumvent the law by referring to its waiters as “Hooters Girls.” Hooters contends that since its food servers are Hooters Girls, males may not be employed in that role. Hooters is incorrect, since, in the stores, Hooters Girls’ primary function is to serve food and drinks. A male or female can perform this function and, therefore, Hooters is not entitled to the defense of bona-fide occupational qualification.

Because it is discriminatory on its face to refuse to hire an entire gender, Hooters will certainly rely on the “bona fide occupational qualification defense.” A BFOQ is a defense to discrimination based on age, sex, religion, or national origin (but, importantly, not race discrimination). It permits discrimination where the protected class (such as sex) is reasonably necessary to the normal operation of that particular business or enterprise. To qualify as a BFOQ, a job qualification must relate to the essence, or to the central mission of the employer’s business. A classic example of a BFOQ is safety-based mandatory retirement ages for airline pilots.

This case will largely hinge on the perception of the real nature of Hooters’ product – does Hooters sell sex or wings? If it’s the former Hooters win, the latter the plaintiff wins. The reasonable view is that Hooters sell wings by using the sex appeal of its servers. If this view prevails, then the plaintiff is probably out of luck.

If I was representing Hooters, I would advise it to give serious consideration to offering the plaintiff a position under the same conditions as it hires all of its female food servers. He would have to wear the same uniform and show off the same cleavage. His acceptance would show his lack of qualification, and his refusal it would show his true motivation for filing suit, while also likely cutting off his economic damages.

[Hat tip: Courthouse News Service, via Above the Law]

Do you know? “Comp” time in lieu of overtime

Do you know? Unless you are a state or local government, it is illegal to provide “comp” time in lieu of time-and-a-half for hours worked in excess of 40 in a work week.

Federal law requires that all non-exempt employees receive an overtime premium of one-half the regular rate of pay for all hours worked in excess of 40 in a given work week. To save on wages, some employers seek to provide overtime as “comp” time to employees. In other words, instead of paying an employee time-and-a-half for overtime worked, the employee would be paid the regular straight time rate, and receive an additional half-hour of paid time off to be banked and used in the future. Under the FLSA, this practice is illegal for private employers. It interferes with employees’ right to be paid their overtime premium.

For state and local governments, the FLSA has a specific provision that allows for the payment of comp time in certain circumstances, such as where it is provided for in a collective bargaining agreement or other agreement between the employer and employee.

For most employers, though, implementing a comp time program to skirt overtime obligations is a huge wage and hour no-no.

What do the recent ADA amendments really mean to employers?

A lot of ink has been spilled about the nuts and bolts of the amendments to the ADA. The amendments make some key fundamental changes to various definitions in the statute, such as to the definition of disability. So, for example, mitigating measures are no longer to be taken into consideration when determination whether an individual has a “disability.” (For more information on the ADA Amendments Act, see House overwhelmingly votes in favor of ADA Amendments Act of 2008).

Much of the ADA Amendments Act, though, is legal minutiae that may be of interest to employers litigating ADA lawsuits, but of little interest to employers running their businesses on a daily basis. Provided that job descriptions are up to date, supervisors are trained on reasonable accommodations and interactive processes, and employees are receiving appropriate accommodations, employers’ day-to-day experiences under the ADA should not change all that much.

So, what then will change? For businesses, the most significant change will be in the cost of defending ADA lawsuits. Most agree that the changes to the definition of disability will make it harder for employer to win dismissals of ADA cases on summary judgment. Because fewer cases will be summarily dismissed, more cases will go to juries for resolutions. This higher incidence of jury issues in ADA cases will increase both defense costs and settlement value in these cases. Because of the potential for increased costs, businesses should be prepared to be extra-vigilant in their handling of employees with potential disabilities.

WIRTW #61

What I’m Reading returns after an extended holiday break.

To follow up on my post from earlier this week on the Ledbetter Fair Pay Act, Michael Moore’s Pennsylvania Labor & Employment Blog comments on the record retention nightmare that this law would create for employers. Michael also has some good thoughts on compliance with the ADA Amendments Act.

In the wake of Boston College firing its head football coach after he accepted an interview with the New York Jets, Gruntled Employees has some thoughts on employee loyalty.

The Workplace Prof Blog reports on a recent NLRB decision that found an unfair labor practice from an attorney’s deposition questions.

With tongue firmly planted in cheek, LaborPains offers 10 New Year’s resolutions for labor union officials.

Where Great Workplaces Start gives us another list, the top 5 ways to be an HR hero in 2009.

The Cleveland Law Library Weblog reminds everyone that as of 1/1/09, Ohio’s minimum wage increased to $7.30 per hour.

Overlawyered brings the story of four Piqua, Ohio, employees who are suing their co-workers for their share of a $207 million Mega-Millions payout. Their claim: “The four said they were out of the office and unavailable to contribute to the office pool for the Dec. 12 drawing but allege an oral agreement that winnings would be shared whether workers happened to be around to contribute or not.”

The Word on Employment Law with John Phillips reminds us that some people simply have too much time on their hands. The evidence, an EEOC complaint alleging religious discrimination stemming from an employee’s use of “Merry Christmas” instead of “Happy Holidays.”

The ABA Journal reports on a Hooters Waitress, fired for having visible bruises courtesy of some domestic abuse, who won her unemployment claim.

The Delaware Employment Law Blog asks a very important question: Why don’t employers care about employees’ internet use?

Jottings By An Employer's Lawyer compares whether recession juries are good or bad for employers. I agree with Michael that large jury awards are usually fueled by anger against the employer and not sympathy for the employee. If this is true, then lawyers picking juries for the foreseeable future will want to try to weed out those potential jurors who have been affected by the recession and harbor anger against corporations as a result.

Maybe you’ve heard, but Wal-Mart recently settled almost all of its pending 76 wage and hour class actions for a staggering $640 million. The Wall Street Journal’s Law Blog suggests that Wal-Mart might have been motivated the Employee Free Choice Act and ponied up as a preemptive strike against unionization.

Meanwhile, World of Work argues that the Employee Free Choice Act may not be as done of deal as some other commentators are suggesting.

Another hot legislative issue, family and caregiver issues, will receive special attention during President Obama’s administration, according to Corporate Voices for Working Families.

Finally, the FMLA Blog reports on a case in which the court held that an employer’s honest suspicion of employee fraud justified its insistence for a second medical opinion.

Five “must haves” for your employee handbook

I’m in the process of drafting an employee handbook, which got me thinking – what are the policies that every handbook absolutely must contain? I came up with a list of the top five “must have” policies.

1. At-will employment disclaimer. I can’t imagine anything worse than an employee being able to successfully claim that an employee handbook creates a contract with the employer, or provides something on which the employee can reasonably and justifiably rely. This disclaimer should be in writing, both in the handbook and on a receipt that employees sign and is placed in their personnel files.

2. Anti-harassment. It’s impossible to take advantage of the Faragher-Ellerth affirmative defense for harassment liability without a policy of which employees can avail themselves.

3. No-solicitation. In light of the implications of the Employee Free Choice Act, it is vitally important to safeguard against non-business uses of company property. Any non-solicitation policy should cover written and oral solicitations, in addition to e-mail and computer systems.

4. Technology. A comprehensive technology policy guards against improper uses of e-mail and computer systems, limits personal uses of company property, tempers employees’ privacy expectations, and protects against potential harassment liability. A very versatile policy that no business should be without.

5. FMLA. If your company is covered by the FMLA, it is required to have an FMLA policy. The new regulations clarify this obligation.

Ledbetter Fair Pay Act likely to be first employment legislation of the Obama Presidency

According to Monday’s New York Times, Congressional Democrats are looking to fast-track the Lilly Ledbetter Fair Pay Act. This should not come as any surprise, given Ms. Ledbetter’s prominent speaking position at last summer’s Democratic convention.

Recall that in Ledbetter v. Goodyear Tire & Rubber Co., the Supreme Court ruled that in pay discrimination cases the federal statute of limitations begins to run when the pay-setting decision is made:

Current effects alone cannot breathe life into prior, uncharged discrimination.... Ledbetter should have filed an EEOC charge within 180 days after each allegedly discriminatory pay decision was made and communicated to her. She did not do so, and the paychecks that were issued to her during the 180 days prior to the filing of her EEOC charge do not provide a basis for overcoming that prior failure.

According to the Court, its narrow reading of the statute of limitations “reflects Congress’s strong preference for the prompt resolution of employment discrimination allegations through voluntary conciliation and cooperation.” Or, at least prior Congresses, as this Congress will certainly pass the Ledbetter Fair Pay Act.

This law will provide that a new and separate violation occurs each time a person receives a paycheck resulting from “a discriminatory compensation decision.” Thus, each paycheck that reflects an alleged discriminatory pay decision will start a new and distinct limitations period. 

Businesses should brace themselves for longer statutes of limitations for pay discrimination claims. Once the Fair Pay Act becomes law, it will be more difficult for companies to know at what point in time a pay decision can no longer be challenged. This law’s Congressional supporters have spoken of the need for fairness. Fairness, however, works both ways, both for employees and employers. A perpetual statute of limitations for pay discrimination claims fosters a perceived fairness for the former at the expense of the latter.

Do you know? The FLSA’s Administrative Exemption

Do you know? What does it take for an employee to qualify under the Fair Labor Standards Act’s Administrative Exemption?

To qualify for the administrative employee exemption, all of the following tests must be met:

• The employee must be compensated on a salary or fee basis (as defined in the regulations) at a rate not less than $455 per week;

• The employee’s primary duty must be the performance of office or non-manual work directly related to the management or general business operations of the employer or the employer’s customers; and

• The employee’s primary duty includes the exercise of discretion and independent judgment with respect to matters of significance.

“Primary duty” means the principal, main, major or most important duty that the employee performs, with the major emphasis on the character of the employee’s job as a whole.

Work “directly related to management or general business operations” includes, but is not limited to, work in functional areas such as tax; finance; accounting; budgeting; auditing; insurance; quality control; purchasing; procurement; advertising; marketing; research; safety and health; personnel management; human resources; employee benefits; labor relations; public relations; government relations; computer network, Internet and database administration; legal and regulatory compliance; and similar activities. It’s work directly related to assisting with the running or servicing of the business, as distinguished from working on a manufacturing production line or selling a product in a retail or service establishment. It also covers employees acting as advisors or consultants to their employer’s clients or customers.

The exercise of discretion and independent judgment involves the comparison and the evaluation of possible courses of conduct and acting or making a decision after the various possibilities have been considered. It implies that the employee has authority to make an independent choice, free from immediate direction or supervision. Factors to consider include, but are not limited to:

• whether the employee has authority to formulate, affect, interpret, or implement management policies or operating practices;
• whether the employee carries out major assignments in conducting the operations of the business;
• whether the employee performs work that affects business operations to a substantial degree;
• whether the employee has authority to commit the employer in matters that have significant financial impact; and
• whether the employee has authority to waive or deviate from established policies and procedures without prior approval.

“Matters of significance” refers to the level of importance or consequence of the work performed.

Information on other FLSA exemptions is also available:

• The Executive Exemption.

Next week, we'll examine the Professional Exemption.

Blawg Review of the Year nominations

For the uninitiated, Blawg Review is a weekly compilation of the prior week’s best posts from the legal blogosphere. It’s peer-reviewed, which means that each week a different blogger hosts the carnival. I had the pleasure of hosting Blawg Review #172 in August, which means that I’ve earned the right to vote for Blawg Review of the Year 2008. In chronological order, here are my votes:

Blawg Review #147, hosted by Rush Nigut of Rush on Business, for teaching me more than I ever thought I could know about Iowa’s geography.

Blawg Review #153, hosted by Declarations and Exclusions, because it’s always fun to talk like a pirate.

Blawg Review #164, hosted by cearta.ie, for transporting me back to the best vacation I’ve ever taken, my 2 weeks in Ireland.

Blawg Review #191, hosted by Likelihood of Confusion, for all of the little Jewish boys and girls who never had a Rankin-Bass holiday special to call their own.