Department of Labor Roadshow Webinars Are Coming Your Way

The U.S. Department of Labor will host four webinars in June and July to discuss how the Department is helping workers and employers by reducing regulatory burdens and making it easier to understand and comply with the law. The webinars will also provide an opportunity for workers, employers, and state and local governments to ask questions and discuss how the Department can expand and improve access to its compliance assistance materials.

All events will include U.S. Department of Labor Deputy Assistant Secretary for Policy Jonathan Wolfson.

The webinars will be hosted by the Department’s Office of the Assistant Secretary for Policy and its Office of Compliance Initiatives. Attendance is free, but attendees must pre-register online. If you have questions, please contact Marisela Douglass at douglass.marisela@dol.gov.

The four webinars are:

Agriculture

Guest Speaker: Wage and Hour Division Administrator Cheryl Stanton

Tuesday, June 23, 2020, 1:00 p.m. to 2:15 p.m. EDT

Register at: Compliance Assistance Webinar 1

 

Manufacturing and Construction

Guest Speaker: Occupational Safety and Health Administration Principal Deputy Assistant Secretary Loren Sweatt

Thursday, June 25, 2020, 1:00 p.m. to 2:15 p.m. EDT

Register at: Compliance Assistance Webinar 2

 

Food Service, Hospitality, and Retail

Guest Speaker: Employment and Training Administration Deputy Assistant Secretary Amy Simon

Tuesday, June 30, 2020, 1:00 p.m. to 2:15 p.m. EDT

Register at: Compliance Assistance Webinar 3

 

Health Care and Emergency Responders

Guest Speaker: Employee Benefits Security Administration Acting Assistant Secretary Jeanne Klinefelter Wilson

Wednesday, July 1, 2020, 1:00 p.m. to 2:15 p.m. EDT

Register at: Compliance Assistance Webinar 4

Opining on Regular Rate of Pay

The U.S. Department of Labor (DOL) has issued three new opinion letters that address compliance issues related to the Fair Labor Standards Act (FLSA).  As a reminder to my readers, an opinion letter is an official, written opinion by the DOL’s Wage and Hour Division (WHD) on how a particular law applies in specific circumstances presented by the employer that requested the letter.  The current group of letters issued include:

 

FLSA2020-3: Addresses excludability of longevity payments from the regular rate of pay. This opinion rules that longevity payments made to employees that clearly “must or shall” be paid cannot be excluded and must be used to calculate the regular rate of pay.  However, if the longevity payment is worded as that it may or may not be awarded, up to the discretion of the employer, then it would not need to be included in the calculation for regular rate of pay.

FLSA2020-4: Addresses excludability of referral bonuses from the regular rate of pay. The employer is offering a referral bonus to employees not involved in recruiting or human resources and would be issued in two parts, one immediately and one if the employee is still employed after a year and so is the employee who was referred.  The opinion states that the first portion of the bonus would not be included in the regular rate of pay calculations as it is not remuneration for employment as it is a voluntary program.  However, the second installment of the bonus would be included as it would be considered the same as a longevity bonus. If the employee received the bonus whether they were still employed or not, it would not be includable.

FLSA2020-5: Addresses excludability of an employer’s contributions to a group-term life insurance policy from the regular rate of pay.  In essence, the opinion states that just because a wage paid is subject to federal taxes under the Internal Revenue Code, does not make the same payment includable in the regular rate of pay.

For more information on opinion letters, see the WHD website.

WHD Issues Final Rule on Bonuses for Fluctuating Workweek Employees

On May 20, 2020, the U.S. Department of Labor Wage Hour Division (WHD) announced a final rule that allows employers to pay bonuses or other incentive-based pay to salaried, nonexempt employees whose hours vary from week to week. The final rule clarifies that payments in addition to the fixed salary are compatible with the use of the fluctuating workweek method under the Fair Labor Standards Act (FLSA).

In the final rule, the Department:

  • Adds language to 29 CFR 778.114(a) to expressly state that employers can pay bonuses, premium payments, or other additional pay, such as commissions and hazard pay, to employees compensated using the fluctuating workweek method of compensation. (The rule also states that such supplemental payments must be included in the calculation of the regular rate unless they are excludable under FLSA sections 7(e)(1)–(8)). The rule grants employers greater flexibility to provide bonuses or other additional compensation to nonexempt employees whose hours vary from week to week, and eliminates any disincentive for employers to pay additional bonus or premium payments to such employees.
  • Addresses the divergent views expressed by the Department and courts―and even among courts―that have created legal uncertainty for employers regarding the compatibility of various types of supplemental pay with the fluctuating workweek method.
  • Adds examples to 29 CFR 778.114(b) to illustrate these principles where an employer pays an employee, in addition to a fixed salary (1) a nightshift differential and (2) a productivity bonus.
  • Revises the rule in a non-substantive way to make it easier to read, so employers will be able to better understand the fluctuating workweek method. Revised 29 CFR 778.114(a) lists each of the requirements for using the fluctuating workweek method, and duplicative text is removed from revised 29 CFR 778.114(c).
  • Changes the title of the regulation from “Fixed salary for fluctuating hours” to “Fluctuating Workweek Method of Computing Overtime.”

Example 1: Suppose an employee were paid $491 in fixed weekly salary plus an $8 per hour nightshift premium. In a week in which the employee works 50 hours, including 4 hours for which the employee receives the nightshift premium, the employee’s straight time pay is $523 ($491 salary plus $32 nightshift premium), and the regular rate is $10.46. The employer need only pay an additional $5.23, half time the regular rate, for each of the 10 overtime hours, for a total of $52.30. The payment of the $8 nightshift premium is reflected in this fluctuating workweek method computation. The fluctuating workweek method therefore correctly computes overtime pay owed under the FLSA when an employee receives a fixed salary and hours based premiums that compensate him or her for all hours worked.

For a complete text of the rule proposal visit the DOL website.

WHD Issues Final Rule on Qualifying as a “Retail or Service” Establishment

On May 18, 2020, the U.S. Department of Labor’s Wage and Hour Division (WHD) announced a final rule to provide one analysis for all employers when determining whether they qualify as “retail or service” establishments for purposes of an exemption from overtime pay applicable to commission-based employees.

Section 7(i) of the Fair Labor Standards Act (FLSA) provides an exemption from the FLSA’s overtime pay requirement for certain employees of retail or service establishments paid primarily on a commission basis. Today’s rule withdraws two provisions from WHD’s regulations. The first withdrawn provision listed industries that WHD viewed as having “no retail concept” and thus were categorically ineligible to claim the section 7(i) exemption. The second withdrawn provision listed industries that, in WHD’s view, “may be recognized as retail” and thus were potentially eligible for the exemption. As the rule explains, some courts have questioned whether these lists lack any rational basis.

As a result of the withdrawal of these two lists, establishments in industries that had been on the non-retail list may now assert that they have a retail concept, and if they meet the existing definition of retail and other criteria, may qualify to use the exemption. These other criteria include paying a regular rate at least one and a half times the minimum wage and providing commissions that comprise more than half the employee’s compensation for a representative period. Some establishments on the withdrawn non-retail list may have been deterred from availing themselves of the exemption and its compensation flexibilities. If establishments on the withdrawn non-retail list now qualify for the exemption, they have added flexibility regarding commission-based pay arrangements with their workers. For these employers and workers, they could consider whether, for instance, more commission-based pay is sensible.

Establishments in industries that had been on the “may be” retail list may continue to assert that they have a retail concept. Moving forward, WHD will apply the same analysis to all establishments to determine whether they have a retail concept and qualify as retail or service establishments, promoting greater clarity for employers and workers alike.

WHD is issuing this rule without notice and comment, and it will take effect immediately. Notice and comment and delaying the effective date are not required because both lists being withdrawn were part of WHD’s interpretive regulations and were originally issued in 1961 without notice and comment or a delay.

 

 

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FAQs Keeping Pace With COVID-19 Questions

As questions pour into the Department of Labor and the Internal Revenue Service from employers on the Families First Act and the CARES Act, both agencies are updating their respective FAQs.  Here are the latest updates:

 

Department of Labor:

DOL has added four FAQs, #90-#93, concerning paid family leave or paid leave. These are:

  • FAQ #90 explains whether paid leave requirements under FFCRA apply to temporary workers. A temporary service with over 500 employees is not required to provide leave to its employees. However, the business with fewer than 500 employees where the temporary worker is placed may be required to if it is a joint employer.
  • FAQ #91 addresses whether an employee who has been teleworking is entitled to paid sick or family leave for a school closure when schools have been closed for the past four weeks during the teleworking period. The DOL explains the fact the teleworking employee did not request paid leave during the teleworking period does not exclude the employee from taking such leave.
  • FAQ #92 describes what kind of documentation an employer is permitted to require from an employee who is seeking a medical diagnosis related to COVID-19 symptoms. The DOL explains an employer may require the employee to identify their symptoms and provide a date for a test or doctor’s appointment. However, no further documentation or certification is required. FMLA related leave requests are subject to FMLA documentation requirements.
  • FAQ #93 clarifies that workers who have taken paid sick and paid family leave due to a school closure may not continue to take paid family leave when the school year ends for summer vacation. However, the employee can take paid family leave on the basis that the child’s childcare provider or summer camp is closed or unavailable during the summer due to COVID-19.

Internal Revenue Service:

  • The Internal Revenue Service updated FAQs #64 and #65 regarding the COVID-19 Employee Retention Credit for how eligible employers treat health care expenses.
  • Notice 2020-29 provides for increased flexibility with respect to mid-year elections made under a § 125 cafeteria plan during calendar year 2020 related to employer-sponsored health coverage, health Flexible Spending Arrangements (health FSAs), and dependent care assistance programs. The notice also provides increased flexibility with respect to grace periods to apply unused amounts in health FSAs to medical care expenses incurred through December 31, 2020, and unused amounts in dependent care assistance programs to dependent care expenses incurred through December 31, 2020.
  • Notice 2020-33 increases the $500 limit for unused amounts remaining in a health flexible spending arrangement (health FSA) that may be carried over into the following year by making the carryover amount 20 percent of the maximum salary reduction amount under § 125(i), which is indexed for inflation. This calculation had been the basis for the $500 limit under Notice 2013-71, but the $500 limit did not incorporate the indexing. Thus, for 2020, under this new notice the carryover amount will increase to $550.  The notice cross references Notice 2020-29 for guidance on how a § 125 cafeteria plan may be amended to allow prospective health FSA election changes for the 2020 calendar year. Notice 2020-29 provides relief in response to the COVID-19 pandemic that, among other things, permits employers to amend § 125 cafeteria plans to provide participants flexibility to change health FSA contribution elections at such times as the employer permits through the end of 2020, provided that any changes are applied only prospectively.

 

Webinar on Corona Virus and Payroll Issues

Don’t Miss Out! Register today for my special webinar/lecture on the Corona virus and the payroll related effects on Friday, April 10, 2020 from 10:00 am Pacific to 11:30 am Pacific. This 90-minute webinar  discusses the quickly changing regulations…federal and state…that the payroll department and payroll professionals must comply with as governments and businesses respond to the COVID-19 pandemic. Topics include:

Federal Regulations:
·         Families First Act
·         Cares Act
·         All New Pertinent Regulations Passed and Signed by the Webinar Date

State Updates On:
·         Tax Filing
·         Unemployment Insurance
·         Paid Sick Leave

Garnishment Updates:
·         Student Loans
·         Creditor Garnishments
·         Child Support
·         Federal Tax Levies

 

The price for this information packed webinar is $149.  As usual, our blog followers will receive a 10% discount by using coupon code CJYFRQA6 at checkout.

Corona Virus Update from DOL

Here is the latest updates from the Department of Labor’s website on the Corona Virus legislation:

On April 1, 2020, the U.S. Department of Labor announced new action regarding how American workers and employers will benefit from the protections and relief offered by the Emergency Paid Sick Leave Act and Emergency Family and Medical Leave Expansion Act, both part of the Families First Coronavirus Response Act (FFCRA). The Department’s Wage and Hour Division (WHD) posted a temporary rule issuing regulations pursuant to this new law, effective April 1, 2020. For more information, see the DOL website  for fact sheets, Q&As, and posters.  The Posters are mandatory.

 

In addition, the DOL has:

Set up a Pandemic page set up on DOL website.

The DOL issued news release on its implementation of the payroll tax credits.

And finally, the CARES Act addresses many of the issues in the FFCRA but still waiting for clarification on what exactly it “changes” or “fixes” in the FFCRA from DOL. It does start the ball rolling on unemployment insurance. DOL issued an operating guidance to the states concerning unemployment insurance.

Register Today for Our Next Lecture and Receive a 10% Discount

Our next lecture Payroll Lecture Series 102: Multistate Employees: Taxes & Wage Hour Law & Garnishments…Oh My! will be held on Monday, March 30, 2020 from 10 am Pacific to Noon Pacific. This webinar/lecture will cover the difficult areas for compliance when processing payroll for employees who live in one state and work in another or who work in two or more states.  This lecture includes:

  • How to determine state withholding liability
  • Who is a resident
  • How reciprocal agreements affect taxation of wages
  • Resident and nonresident taxation policies
  • The four factor test for state unemployment insurance
  • Income and unemployment taxation of Fringe benefits
  • What wage and hour laws must be followed
  • How to handle income and unemployment insurance taxation for employees working in multiple states
  • How working in multiple states could affect withholding for garnishments
  • Withholding requirements when an employee is in a state temporarily
  • Which states require the use of their own Withholding Allowance Certificate, which states allow either theirs or the Form W-4, and which states don’t have a form
  • Reporting wages for multistate employees on Form W-2

We are an APA approved provider for 2020. This lecture has been submitted to the APA for 2.0 RCHs.  As with all my lectures, my subscribers will receive a 10% discount by using the coupon code EFVMPZC9 at checkout.  But you must register before March 25, 2020 to receive the discount.

Our Next Webinar/Lecture…Multistate Employees

Our next lecture Payroll Lecture Series 102: Multistate Employees: Taxes & Wage Hour Law & Garnishments…Oh My! will be held on Monday, March 30, 2020 from 10 am Pacific to Noon Pacific. This webinar/lecture will cover the difficult areas for compliance when processing payroll for employees who live in one state and work in another or who work in two or more states.  This lecture includes:

  • How to determine state withholding liability
  • Who is a resident
  • How reciprocal agreements affect taxation of wages
  • Resident and nonresident taxation policies
  • The four factor test for state unemployment insurance
  • Income and unemployment taxation of Fringe benefits
  • What wage and hour laws must be followed
  • How to handle income and unemployment insurance taxation for employees working in multiple states
  • How working in multiple states could affect withholding for garnishments
  • Withholding requirements when an employee is in a state temporarily
  • Which states require the use of their own Withholding Allowance Certificate, which states allow either theirs or the Form W-4, and which states don’t have a form
  • Reporting wages for multistate employees on Form W-2

We are an APA approved provider for 2020. This lecture has been submitted to the APA for 2.0 RCHs.  As with all my lectures, my subscribers will receive a 10% discount by using the coupon code EFVMPZC9 at checkout.  But you must register before March 25, 2020 to receive the discount.

More DOL Opinion Letters Issued

The U.S. Department of Labor, Wage and Hour Division (WHD) announced that it issued two new opinion letters that address compliance issues related to the Fair Labor Standards Act (FLSA).  As a review, an opinion letter is an official, written opinion by the Department’s Wage and Hour Division (WHD) on how a particular law applies in specific circumstances presented by the person or entity that requested the letter. The opinion letters issued are:

  • FLSA2020-1: Addressing calculating overtime pay for a non-discretionary lump sum bonus paid at the end of a multi-week training period.
    • The background: the employer informs its employees in advance that they will be eligible to receive a lump sum bonus of $3,000 if they successfully complete ten weeks of training and agree to continue training for an additional eight weeks. You acknowledge that the bonus is nondiscretionary. The employee does not have to complete the additional eight weeks of training, however, to retain the lump sum bonus.
    • The opinion: As an initial matter, the lump sum bonus paid to your client’s employees must be included in the regular rate of pay as it is an inducement for employees to complete the ten-week training period. Because the employer pays the lump sum bonus to employees for completing the ten-week training and agreeing to additional training without having to finish the additional training, the lump sum bonus amount must be allocated to the initial ten-week training period. Based on the facts provided, it is appropriate for the employer to allocate the lump sum bonus of $3,000 equally to each week of the ten-week training period. Each week of the ten weeks counts equally in fulfilling the criteria for receiving the lump sum bonus, as missing any week (regardless of whether the employee worked overtime in that week) disqualifies the employee from receiving the lump sum bonus.
  • FLSA2020-2: Addressing whether per-project payments satisfy the salary basis test for exemption.
    • The background: the company employs educational consultants to provide services to schools and school districts throughout the country. These educational consultants are assigned to projects lasting various periods of time. The Department of Labor assumed that educational consultants meet the duties tests of the administrative or professional exemptions. The company will determine educational consultants’ compensation on a per-project basis regardless of the amount of time required to complete the project. The company will make payments for the project in “equal pre-determined installments” biweekly or monthly. The company provided two examples with the opinion request.
      • Example 1: for developing a new literacy curriculum, the educational consultant will receive a predetermined amount in 20 biweekly installments paid throughout the district’s academic year. That the amounts of these payments will not vary from week to week or month to month based on the number of hours worked by the consultant on the project and, for purposes here, the DOL presumed they will not vary based on the quality of the work performed. As a result, this payment structure satisfies the requirement that employees be paid a predetermined amount constituting all or part of the employee’s compensation” paid weekly or less frequently, provided the payments are not subject to reduction because of variations in the quality or quantity of work performed.
      • Example 2: the same educational consultant in example 1, is assigned to a second eight-week assignment (Project Two) while continuing to work on the original assignment. For completing the second project, in addition to payments received for work on the first project, the consultant will be paid $6,000 in four $1,500 biweekly installments, for a total of $5,500 per pay period during the eight weeks in which the projects overlap. The employer’s payments for the second project also satisfy the requirements as “extra” compensation under the regulations.
    • The Opinion: Both examples met the requirements for payments under the salary basis rule.