Find below a brief description of several recent and pertinent legal updates, the status of each bill, and its potential effective date.
Department of Labor Fair Labor Standards Act (FLSA) Overtime Proposed Rules Change
Proposed Rule Change – A 2016 effective date will likely be established in the final rule
The DOL recently released their FLSA proposed rule change. Here are the highlights:
- Significant Impact. Employees and employers across every industry and sector will be impacted. Most employers covered by the FLSA will need to analyze employee classifications and make other changes by a likely 2016 effective date which will be established in the final rule.
- Salary Level Will Increase. To be exempt currently, workers must make more than $455/week ($23,660 annually). The proposed rule sets the standard salary level at the 40th percentile of weekly earnings for full-time salaried workers which for 2013 was $921 per week, or $47,892 annually. If the 40th percentile approach is adopted, the 2016 level is projected to be $970 a week, or $50,440 annually.
- For the First Time Ever, DOL Proposes to Automatically Raise the Salary Level. The Department is proposing to automatically update the salary level (including for highly compensated employees) on an annual basis, either based on percentiles of earnings for full-time salaried workers or based on changes in inflation.
- Feedback Sought on Duties Test and Nondiscretionary Bonuses. While no changes have been proposed yet, the regulation acknowledges challenges associated with the duties test and seeks additional examples regarding specific occupations. Similarly, the Department wants to hear from employers about the possibility of including nondiscretionary bonuses to satisfy a portion of the standard salary requirement.
What do I need to do in response?
Employers that have not recently done a classification audit may be at risk when these new changes take effect. Allan Bloom of the National Law Review advises the following:
Evaluate the classification status of workers carefully at the outset of the work relationship to determine whether a worker is exempt or overtime-eligible. If you inherit a large number of exempt employees (such as following an acquisition or a merger), perform due diligence to determine if there is potential for misclassification liability;
Conduct a privileged audit of your exempt workforce to determine what portions of your workforce will be affected by the proposed new rules. For example, assuming that the DOL’s projections are accurate, employers should be prepared to increase the salaries of exempt workers who earn less than $50,400 per year, to reclassify those individuals to overtime-eligible, or to take other measures to address the increased costs.
Read more in “Highly Anticipated Proposed Changes to FLSA
White Collar Exemptions Released” by Allan Bloom
Statewide Paid Sick Leave Bill
Expected to be Signed by the Governor – Would take effect January 1, 2016
Similar to the Portland Paid Sick Leave Ordinance, this bill mandates employers with over 10 employees (six or more employees if located in a city with a population over 500,000) working in the state of Oregon to provide paid sick leave for employees. The sick time accrues at a rate of at least 1 hour leave per 30 hours the employee works, or 1-1/3 hours for every 40 hours the employee works. The employer may choose to frontload 40 hours of sick time at the beginning of each leave year.
Carryover of unused sick time from one year to a subsequent year is limited to 40 hours. An employer may adopt a policy that limits total accrual to 80 hours of sick time and the accrual and use of sick time may be limited to 40 hours in a year.
The bill preempts the authority of local governments to set sick leave requirements, so it will trump the Portland and Eugene ordinances once effective.
The sick time may be used for an employee’s health condition and/or medical needs, care of a family member, purposes covered by OFLA, purposes covered under the domestic violence leave law, public health emergencies, and the donation of accrued sick time to another employee for a purpose covered by this law, barring the employer’s policy regarding sick leave donations allows this.
What do I need to do in response?
Employers should work with their HR team to review and update PTO, vacation, and/or sick leave polices so that they are consistent with their total rewards philosophy and the upcoming requirements. Any needed compliance updates will need to be implemented and communicated to employees by January 2016. Read more on Barran Liebman’s e-alert on the topic, “Mandatory Sick Time for All of Oregon”
“Ban the Box” Legislation
Expected to be Signed by the Governor – Would take effect January 1, 2016
Pending re-approval from the House, this revised bill prohibits Oregon employers from including questions on employment applications regarding criminal history or convictions. Conditional offer letters are still allowed pending background check results.
What do I need to do in response?
Review employment applications used in Oregon and revise as necessary. This is also an opportunity to provide your hiring managers with training on legal and effective interview and selection practices. Read more on OregonLive: “Oregon Senate approves amended ‘Ban the Box’ bill, aimed at helping ex-convicts get jobs”
OFLA Mandatory Continuation of Medical Coverage
Passed – Effective January 1, 2016
Employees on family leave must be provided their regular group health insurance coverage as if they were still working their regular schedule, versus putting them on COBRA during their leave. This has long been a required element of the Federal Family Medical Leave Act (FMLA) but is now extending below the 50 employee threshold to impact employers with between 25 and 49 employees.
What do I need to do in response?
If you are an employer covered under the Oregon Family Medical Leave Act, work with your HR team to review and update your leave policy. Read more here.
Image credit: Edmund Garman