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| OVERTIME Curtis Samuel scores the winning touchdown in the second overtime for Ohio State. (Greg Bartram/USA Today Sports) |
Before I could add the second part to
the additional insured post from a couple weeks ago, some interesting things
happened in the world of Employment Practices Liability (EPL). That triggered this post, as the rule itself is not as important as the overall subject matter.
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New overtime rules for "while
collar" workers, part of the Fair Labor Standards Act (FLSA), were to take
effect as of December 1, 2016. The new OT rules, if or when they go into effect, change the "exempt" employee qualifying amount of compensation (one of several "tests" to determine eligibility) from $23,660 per year to $47,476, which is basically double. That means business owners that are not paying attention will immediately be out of compliance for any "exempt" employee making less than $47,476.
As respects this rule, a Texas judge has issued a preliminary
injunction. That injunction stems from a legal case brought by several states and business organizations.
The injunction is not permanent, so the "freeze" on implementation by
the Department of Labor may or may not be for long. Opinions differ as to
whether the new rules will ever be implemented, and as you can imagine the
reasons are mostly political in nature. But either way I'm guessing you're
wondering what this has to do with you.
The problem. Odds are that some of
your customers are in trouble and just don't know it, either due to their business
practices related to non-exempt employees, or the fact that they don't have EPL including wage and hour
coverage, or both.
Several years ago plaintiff
attorneys discovered that the employment practices of many businesses are
ripe for legal action. This occurs in at least two areas related to wage and
hour, 1) mis-classification of exempt employees and 2) poor or no record
keeping regarding overtime hours for non-exempt employees. Some business operations do a fair
to poor job of properly identifying who is and who is not an
"hourly" employee, and that mistake compounds over time.One common misconception is that classifying employees is up to the employer. It's not as there are Federal guidelines and "tests" to be applied that don't leave much room for subjectivity. Even if the employer gets the classification correct, those employers that don't keep accurate records of hours worked open themselves up to suits alleging that back pay is owed for OT - almost always from former employees. The onus of responsibility in these situations is on the employer to prove they have accurate records of both hours worked and the payment for those hours.
What to do? First, your customers
need to know the rules that exist now relative to exempt and non-exempt
employees and how to properly apply those rules in their business operations. If they don't know for certain they need to ask for help
to be sure they're following the rules that are established. That may or may
not require a consultant, but given the cost of a consultant vs fines,
penalties and legal costs, it seems like a pretty easy choice. Second, review
their current EPL policy to see if that policy provides defense for wage and
hour law violations (part of FLSA). If the policy does provide wage and hour
language, read it. Most policies are defense only, i.e. no indemnity
coverage, and most only offer a sub-limit, usually $100K.
If they don't have EPL coverage in
place, quote and bind coverage for them asap and make sure you explain what is and is not provided by that policy.I'm fairly certain that if you do a little reading and get current on this issue, you'll be a huge resource to your customer and separate yourself from many of your competitors on this subject. If you have questions or want to discuss the topic, let us know and we'll be happy to help.
