PROPOSED CHANGE IN OVERTIME COMPENSATION
The Department of Labor proposes to revamp the dated overtime compensation provisions of the Fair Labor Standards Act (FLSA). Currently, workers who earn more than $155 a week, or $8,060 a year, and meet other ambiguous criteria such as “intellectuals” or who are “devoted to exercising discretion 80 percent of their time” are exempt from receiving overtime pay. The proposal seeks to raise the salary cap to $425 a week, or $22,100 a year, and any worker, regardless of their classification, who earns less than that amount will automatically be required to receive overtime pay for time spent working beyond 40 hours a week.
Which employees will be most affected by the proposed changes? Assistant managers of stores, restaurants and bars, despite their management status, would get overtime compensation if they earn less than $22,100 a year. Those workers and employers subject to a collective bargaining agreement, however, will not be affected by the proposed changes. The collective bargaining agreement will govern how employees are compensated for overtime work.
The proposal also clarifies and simplifies definitions of administrative, executive and professional employees that should be exempt from overtime pay. Generally, workers would be exempt under the proposal if they manage more than two employees and have the authority to hire and fire, or they have an advanced degree and work in a specialized field, or they work in the operations, finance and auditing areas of a company.
According to the Department of Labor, the proposed revisions would provide for an easier, clearer understanding of the overtime compensation provisions of the FLSA and, potentially, reduce lawsuits filed in connection with overtime pay disputes. On the other hand, employers could face increased payroll costs to implement the new requirements.
EMPLOYMENT NEWSLETTER 8-02
AN EMPLOYER'S OBLIGATION TO MAINTAIN EMPLOYEE RECORDS
All employers should be aware of the various federal and state laws requiring companies to maintain certain records regarding their employees. In the event of a lawsuit, an employer may be required to produce these records. Failure to do so can lead to fines and other adverse actions.
Title VII of the Civil Rights Act of 1964 requires employers to maintain all personnel or employment records made or kept by the employer. These include application forms, and records pertaining to hiring, promotion, demotion, transfer, layoff or termination, rates of pay or other terms of compensation, and selection for training or apprenticeship. Employers must also keep all records relevant to a charge of discrimination or lawsuit brought against the employer. Employers with 100 or more employees must keep a copy of the EEOC's form EEO-1, also called the Employer Information Report. Other records, relating to apprenticeship programs, must also be kept.
The personnel and employment records listed above must be kept for one year, either from the date the record was made, or from the date the personnel action was taken, whichever is later. Records relevant to a charge of discrimination or lawsuit must be kept until the final disposition of the charge or action.
Other federal laws have their own record retention requirements. For example, under the Age Discrimination in Employment Act (ADEA), employers must keep all payroll or other records containing each employee's name, address, date of birth, occupation, rate of pay, and compensation earned per week. The ADEA also requires employers to keep copies of employee benefit plans, as well as written seniority or merit rating systems. Even if the plan or system is not in writing, a summary memorandum must be kept.
The Fair Labor Standards Act (FLSA) requires employers to keep basic records containing employee information, payroll records, individual contracts or collective bargaining agreements, applicable certificates and notices of wage-hour administrator, sales and purchase records.
Employers must also maintain basic employment and earnings records, wage rate tables, work-time schedules, records of additions to or deductions from wages paid, and documentation of basis for payment of any wage differential to employees of the opposite sex in the same establishment.
Under the Family and Medical Leave Act (FMLA), employers must keep dates and hours of FMLA leave taken by employees.
The Occupational Safety and Health Administration (OSHA) requires a log and summary of occupational injuries and illnesses, briefly describing recordable cases of injury and illness, extent and outcome of each incident, and summary totals for calendar year, as well as a supplemental record containing more detailed information for each occurrence of injury or illness.
This is not a comprehensive list of record retention requirements. These federal laws, and other state laws, may include more requirements than those listed here.
EMPLOYMENT LAW ALERT (6-03)
SUCCESSOR CORPORATIONS WIN RIGHT TO ENFORCE
NON-COMPETE AGREEMENTS
The Florida Supreme Court recently strengthened the ability of companies to enforce non-compete agreements belonging to predecessor companies. Corporate Express Office Products Inc. v. Phillips,(Fla. April 13, 2003). The Supreme Court reversed several appellate court decisions and held that when there exists a 100 percent purchase of corporate stock or a corporate merger, the enforceability of a non-compete agreement executed by an employee at the predecessor corporation will be binding on that employee at the new company. However, when a company purchases only the assets of a predecessor, the successor cannot enforce the non-compete unless the employee has consented to an assignment of that non-compete agreement.
This decision has far-reaching impact for Florida businesses. Previously, several appellate courts in Florida had held that non-compete agreements were considered personal service contracts that could not be assigned without the employee's consent. Now, with the Supreme Court's decision, companies may be able to enforce their predecessor's non-compete agreements, depending on the type of business transaction used to make the corporate acquisition. If the business transaction involves a 100 percent stock sale, unlike a partnership, the corporate entity is not dissolved by a change in ownership. "In fact, a foundation of corporate law is that, unlike a partnership or a sole proprietorship, the existence of a corporate entity is not affected by a change in its ownership or changes in management." The Court found that a change in the ownership or management of a corporation in a stock purchase does not affect the predecessor's contractual rights.
As to corporate mergers, the Court concluded that when two companies merge, they both remain in existence and are joined into a single corporate entity. Therefore, merged companies also have the right to enforce a non-compete agreement entered into by an employee of the merged company.
On the other hand, the Court concluded that when there is only a purchase of corporate assets, there must be an express assignment by the employee of the non-compete agreement. The Court reasoned that, in contrast to a sale of corporate stock, in a sale of corporate assets, the transaction introduces into the equation an entirely different entity, that is, the acquiring business. That acquiring business may purchase tangibles such as machinery and intangibles such as accounts receivables. The Court concluded that when a company acquires the assets of another business entity, it does not, as a matter of law, assume the right to enforce the non-compete agreements of the prior business.
EMPLOYMENT LAW ALERT
EMPLOYERS MAY TERMINATE EMPLOYEES WHO REFUSE
TO SIGN ARBITRATION AGREEMENT
On May 22, 2002, the Eleventh Circuit Court of Appeals held that that an employee's refusal to sign an arbitration agreement is not a protected activity under the anti-discrimination statutes. Therefore, an employer may terminate an employee who refuses to sign an arbitration agreement. Weeks v. Harden Manufacturing Corp.
In Weeks, employees were fired for refusing to sign an arbitration provision mandating that all claims arising out of employment, including discrimination claims, must be resolved through arbitration. The employees subsequently brought claims for retaliation in federal court. However, in order to prevail on a retaliation claim, the plaintiff must prove, among other things, that he/she objectively believed that the employer was engaged in unlawful employment practices. The Eleventh Circuit ultimately agreed with the employer that the employees did not engage in statutorily protected conduct because they could not have reasonably believed that the mandatory arbitration provision was an unlawful employment practice at the time they refused to agree to the policy.
Furthermore, even if an arbitration agreement were found to be unenforceable, the court held that an employer does not violate anti-discrimination statutes by requiring employees to sign it. An unenforceable arbitration agreement does not amount to an unlawful employment practice under federal law. The court also looked to statutory language and found nothing in the statutory text which identifies compulsory arbitration agreements to be an unlawful employment practice.
What does this mean for employers? Since courts favor arbitration agreements, employers may choose to have current and new employees sign an arbitration agreement. Employers benefit because arbitration is generally a faster and less expensive way to resolve disputes. Furthermore, agreements can be made "a condition of employment" such that an employer can terminate or not hire an individual because he/she refused to sign the agreement.
For questions concerning this issue or any other employment-related issues, please contact Claire Saady at 813-909-7379 |
