Posts filed under ‘HR’
It’s alive! The U.S. Department of Labor finalized regulations increasing the minimum salary level for an employee to be exempt from overtime pay requirements from $455 a week to $913 a week. This means that when the regulations become effective in December, unless your supervisors make at least that amount, they must be paid the overtime rate of time and one-half for each hour they work over 40.
In addition, under current law there was an exception from overtime pay for highly compensated employees (HCE) who make at least $100,000 annually but whose duties don’t qualify them for exempt classification. This regulation increases the HCE threshold to $134,000. Check with your HR person on this one as there are exceptions that apply to certain professions.
The minimum salary threshold will be updated every three years beginning in 2020. It will be adjusted so that it is equal to the 40th percentile of full-time salaries for workers in the lowest wage region (which is currently the South). As originally proposed, the exempt employee threshold would have been adjusted annually to equal the 40th percentile of full-time salaried workers nationally. This would have resulted in a threshold of over $50,000, which is the number I used in a recent blog. Nevertheless, if and when this regulation becomes effective, it will mark the first time that the exempt employee threshold is automatically updated on a periodic basis.
Why do I say “if and when this regulation becomes effective?” I’ve always thought that this regulation was, in part, politically motivated. I strongly suspect that it will become a major campaign issue with the Donald pledging to annul the regulation and Hillary pledging to ensure that it goes forward untouched.
But with the regulation now finalized, you must find out, if you don’t already know, how many of your currently exempt employees make less than this threshold, how much overtime they work, and if it makes more sense to bump their salaries so that you may continue to classify them as exempt employees, pay them overtime or make sure they don’t work more than 40 hours a week.
Incidentally, there is some good news in all this. Up to 10% of the standard salary level can come from non-discretionary bonuses, incentive payments and commissions, provided they are paid at least quarterly. Furthermore, the final regulation makes no changes to the way in which employers classify exempt and non-exempt employees based on the duties they perform. Many of us were concerned that the Department would institute a rigid test under which employers would have to document that a supervisor spends at least 50% of her time carrying out supervisory responsibilities. This would have harmed many small credit unions.
Finally, when you are done reading this blog, it’s time to reach out to your HR professional so that you can understand precisely how this regulation will impact your credit union. On that note, get to work and enjoy your day.
Credit unions are not just financial institutions; they are small businesses. This means, of course, that even regulations that have nothing to do with banking can pose challenges to their bottom line. While we can’t prevent the federal government from churning out mandates, the more we can plan ahead, the more we can mitigate compliance expenses.
What triggered this didactic diatribe? Most importantly, the U.S. Department of Labor will be finalizing regulations this year that will increase the minimum salary level for employees to be considered exempt from $455 a week to $970 a week, which equals at least $50,440 annually. This is a big deal for credit unions as it is for all businesses. For example, if you currently have an exempt supervisor who makes $44,000 a year, you will have to decide whether to 1) increase his wage; 2) pay overtime or 3) limit overtime. These types of decisions take time, so my first point in writing this blog this morning is to remind you that if you haven’t started reviewing how your costs may be affected by this regulation, you should.
The second point of this blog is to point out just how out of touch federal regulators can sometimes be with reality. During a hearing of the Senate Committee on Small Business and Entrepreneurship last week, I assumed I had simply misunderstood the testimony of D. McCutchen, who pointed out that the DOL estimates that it will only take businesses about one hour of a midlevel employee’s time to familiarize themselves with these regulations. Sure enough, you can find that estimate in the preamble to the proposed regulations under the Department’s assessment of regulatory familiarization costs.
As up and coming Republican U.S. Senator Tim Scott of South Carolina explained, this analysis was “hogwash.” It also makes me wonder yet again how many of the regulators overseeing workplace conduct in this country have actually ever had a job in the private sector.
Bathroom Access For Transgender Employees Under Federal Law
Given the amount of attention the federal government guidance on the use of facilities by transgendered students received last week, I figured now is a good time to point out that the EEOC recently released a fact sheet on bathroom access rights for transgender employees. The fact sheet, among other things, reminds employers that:
“Gender-based stereotypes, perceptions, or comfort level must not interfere with the ability of any employee to work free from discrimination, including harassment. As the Commission observed in Lusardi: “[S]upervisory or co-worker confusion or anxiety cannot justify discriminatory terms and conditions of employment. Title VII prohibits discrimination based on sex whether motivated by hostility, by a desire to protect people of a certain gender, by gender stereotypes, or by the desire to accommodate other people’s prejudices or discomfort.”
How much can you, or should you, discipline employees for comments they make on their own social media accounts, like Facebook? That is the question I have been asking myself since reading this article in the CU Times reporting that MTC Federal Credit Union based in Greenville, South Carolina fired one of its loan officers for using a racial slur on Facebook.
The CU Times reports that Gerri Cannon admitted to posting the slur, but also contended that she is not a racist and has retained a lawyer. As I like to point out, retaining a lawyer doesn’t mean you have a case. Ms. Cannon’s dilemma provides an important teaching moment for credit union employers and employees alike.
The first thing I always hear in these cases is that the employee’s free speech rights are being violated. But they aren’t. The First Amendment restricts government conduct, not the conduct of private citizens. Hudgens v. N. L. R. B., 424 U.S. 507, 513, 96 S. Ct. 1029, 1033, 47 L. Ed. 2d 196 (1976). This means that Ms. Cannon has a right to post just about anything she wants on Facebook and MTC FCU has every right to fire her for it.
The second question that always gets raised in these situations is that the Employee Handbook didn’t ban the specific conduct. But to answer this question, we need to take a little detour. As most of you know, New York, like most other states, is an at-will employment state. This means that unless otherwise specified, employment is for an indefinite period of time and may be “freely terminated by either party at any time for any reason or even for no reason.” Lobosco v. New York Tel. Co., 96 N.Y.2d 312, 316, 727 N.Y.S.2d 383, 751 N.E.2d 462 (2001). There is a misconception on the parts of employees and employers that a handbook creates a contract which modifies at-will employment. And, in fact, there have been cases in which a poorly drafted handbook restricted the ability of employers to get rid of an employee. Weiner v. McGraw-Hill, Inc., 57 N.Y.2d 458, 465-66, 443 N.E.2d 441, 445 (1982).
But this is very much the exception to the rule. As a federal court noted earlier this year New York’s Court of Appeals has pointed out, “[r]outinely issued employee manuals, handbooks, and policy statements should not be lightly converted into binding employment agreements. This is especially true where the handbook contains an express disclaimer.” Rumsey v. Ne. Health, Inc., 89 F. Supp. 3d 316, 340-41 (N.D.N.Y. 2015), aff’d, No. 15-833, 2016 WL 336196 (2d Cir. Jan. 28, 2016), as corrected (Jan. 29, 2016).
Does this mean that a credit union can just ignore its handbook? Not at all. A more typical case than the one involving MTC FCU involves a discharged employee who argues that she was unfairly disciplined by her employer because of her race. For instance, let’s say that a credit union routinely looks the other way when it hears about inappropriate comments on employee Facebook pages. If that same credit union turns around and fires a pregnant or minority employee who makes such a comment, the unequal treatment can be used as evidence of discrimination on the part of the employer. Redford v. KTBS, LLC, No. 5:13-CV-3156, 2015 WL 5708218 (W.D. La. Sept. 28, 2015), on reconsideration in part, No. CV 13-3156, 2016 WL 552960 (W.D. La. Feb. 10, 2016).
One more thing to keep in mind when monitoring employee social media conduct is to make sure you are not violating federal labor laws. As I’ve mentioned in previous blogs, the NLRB is aggressively protecting the right of employees to engage in “concerted activity” using social media. This means that an employee’s complaints about his workplace may in fact be protected. It also means that you must be sure that your social media policies are not so poorly written that they can be read as prohibiting employees from taking to Facebook to talk about workplace concerns.
Needless to say this is one of those fast evolving areas that creates confusion and legal actions. This is one of those areas where a review of your handbook and a call to your attorney make a lot of sense.
On that note, enjoy your day.
I have many important lessons to impart to you this morning:
Most importantly, if you live in the Northeast, never ever move the snow blower to the back of the garage before May even if it has been such a freakishly warm winter that golf courses are already open.
Second, always record any sporting event that starts after nine PM on the off-chance that you will sleep through one of the greatest endings in college basketball history.
Third, you should all take the time to read a legal opinion letter on the custodial powers of federal credit unions recently issued by the NCUA.
In response to an inquiry from Paul T. Clark of the Seward & Kissel Law Firm, NCUA’s General Counsel said that a federal credit union is authorized, at a member’s direction, to place funds, which initially have been deposited into the FCU, into an FDIC account and to serve as custodian for that account, provided that several conditions are met. It is an important clarification of the flexibility FCUs have to serve members without crossing the line between acting as custodians of funds to becoming trustees and broker dealers.
Why is this flexibility important? Unfortunately, the letter does not explain what the firm was seeking to do with this authority, but I can think of situations where a credit union and its member may want the flexibility to move funds into a FDIC account without leaving the credit union. For example, as explained in a legal opinion letter from 2009, the CDARS service enables a bank to accept large deposits from its customers and, on behalf of the customer, spread the deposits in excess of FDIC insurance limits to other FDIC-insured banks, so the funds are fully insured. In its 2009 letter, NCUA authorized the participation of credit unions in this program but that opinion dealt specifically with credit unions authorized to accept public funds. (https://www.ncua.gov/Legal/OpinionLetters/OL2009-1022.pdf#search=cdars). NCUA’s most recent letter makes it clear that federal credit unions are authorized to place funds in FDIC accounts while still being the custodian of a member’s accounts. This letter also makes it easier for credit unions to place a portion of a member’s money into a trust.
But be careful when using this letter. The General Counsel stresses that credit unions “generally” don’t have trust powers or broker dealer authority. Why is this distinction important? Because, as explained by Blacks’ Law Dictionary, a trustee must “protect and preserve the trust property, and to ensure that it is employed solely for the beneficiary, in accordance with the directions contained in the trust instrument.” In contrast, a custodian is simply responsible for holding funds, making sure they are available and making sure that only authorized persons have access to them.
Which leads us to my fourth important lesson of the day. I have a sneaking suspicion that there are many credit unions that confuse custodial and trust powers. My simple rule of thumb is that if you find yourself reading a trust document to understand the credit union’s responsibilities, you are probably doing more than you can or should. All you need to do is properly label the account and make sure that only authorized trustees can access it. It is the trustee’s job to make sure the account is properly administered.
Here is where you can access the letter:
This is no April Fool’s joke. Yesterday it was announced that Montauk Credit Union, which was placed into conservatorship by the DFS in September as a result of the dramatic decline in Taxi Medallion prices, has merged with Bethpage Federal Credit Union on Long Island.
The merger means that the Long Island based Bethpage FCU will now have a presence in New York City. According to Bethpage’s press release, Montauk headquarters at 111 West 26th Street will be converted into a full service community branch and shared service facility through the Coop Shared Branch Network. Bethpage’s asset size will increase from $6.4 to $6.6 billion. NCUA’s emergency powers give it broad authority to approve mergers involving insolvent credit unions, so long as alternatives are not reasonably available and the merger is in the public interest.
Incidentally, Bethpage started in 1941 as a credit union for Grumman employees. In 2003, responding to the loss of military contractor jobs on Long Island, it converted from a SEG based to a community based credit union.
Mindful of the need to keep New York State as business friendly as possible, the State Legislature last night approved a budget that held the line on education spending and continued to aid the growth of business in the state, which is facing increasing pressure from cheaper Southern and Western locales. April Fools!!!!!
As I write this, the Legislature is still working to pass a budget for the 2016-2017 State Fiscal Year. There is no budget I remember that will have a more direct impact on employees and employers. Most importantly, the budget includes a phase in of a regionally based minimum wage increase and a state-level paid family leave requirement.
According to the Governor’s press release, workers in New York City employed by businesses with at least 11 employees would see their minimum wage rise to $11 at the end of this year and then $2 more for each of the next two years to reach $15 an hour. Workers in New York City employed by businesses with fewer than 11 employees will see their minimum wage rise to $10.50 at the end of this year, and then see annual increases of $1.50 an hour until it reaches $15 an hour in 2019. The minimum wage for workers in Nassau, Suffolk and Westchester Counties will reach a $15 minimum wage by the end of 2021. In the rest of the state the minimum wage will increase to $9.70 at the end of this year and then increase $.70 annually until it reaches $12.50 an hour by the end of 2020. Further increases in the upstate minimum wage will be determined by the Director of the Division of the Budget in consultation with the Department of Labor.
As for paid family leave, it will be phased in between 2018 and 2021. According to the Governor’s press release, the program will be funded “entirely” through a nominal payroll deduction on employees so that it cost businesses “nothing.” Call me wacky, but I could swear the budget includes a sweep from the workers’ compensation fund to help get the program up and running. Furthermore, doesn’t it cost employers something to accommodate the absent employee? Finally, I don’t know about you but I don’t know how many more “nominal” deductions my paycheck can take.
Needless to say, there are many things that credit union employers will have to learn in the coming months and years. As we read through the budget bills, we will pass on the information.
That’s the question posed in a case recently decided by an Administrative Law Judge (ALJ) for the National Labor Relations Board (NLRB). His decision demonstrates that March Madness extends well beyond the basketball court.
The National Labor Relations Act protects not only unionized workers but non-unionized workers involved in concerted activities dealing with workplace concerns. I strongly suspect that this language was included in the statute to protect employees who wanted to unionize or at least stand together to solve a common workplace problem with their employer. However, the NLRB has used this authority to encroach into virtually every workplace in America. The latest example of this trend comes in the form of a March 16 decision involving Quicken Loans.
On February 11, 2015, two employees of Quicken Loans, Austin Laff and Michael Woods, were in a rest room adjacent to a reception area and open for use by the public. The two were having a bad day and Laff told Woods to smile. Woods proceeded to tell him that a potential client should get in touch with a “f…ing client care specialist and quit wasting his f…ing time.” Laff responded to Woods by telling him he understood why he was frustrated. The conversation was overheard by Quicken Loans management, which eventually sent out an email reminding employees in no uncertain terms that there should never be any swearing in the bathroom, especially about clients. It also made clear that it was not professional to accuse clients of wasting employee time.
The email led to a further investigation of the bathroom banter. Laff, who had been involved in previous misconduct, was eventually discharged and Woods was disciplined. Now here’s the part of the story that is most important to you. The ALJ ruled that this brief expletive laden exchange was not simply two employees blowing off steam, but rather protected activity for which they could not be disciplined. According to the ALJ, “there is no question” that Laff and Woods “were discussing common concerns regarding terms and conditions of employment” related to how calls were handled.
I’ve said it before and I’ll say it again, the NRLB makes the CFPB look downright conservative. My diatribe notwithstanding, this case serves as yet another reminder of why you don’t have as much flexibility to discipline your employees as you once did.
The latest in a series of proposed regulations in which the Government is seeking to intrude into the work place is set to be unveiled today. The Wall Street Journal reports that this morning the Equal Employment Opportunity Commission (EEOC) will be rolling out proposed regulations requiring employers to disclose to the Government a summary of pay data. This information will be used to target employers who may be violating federal law mandating equal pay for equal work. The rule would apply to employers with 100 or more employees. Lest you think you’re off the hook completely, keep reading.
The Government have been moving this direction for a while. Earlier this year, similar reporting requirements were imposed on federal contractors. On the State level, New York has already put in place new equal pay protections that could directly impact your credit union. On January 19, amendments to Section 194 of New York’s Labor Law took effect.
New York has long outlawed pay discrimination based on sex; however, it has authorized pay discrepancies so long as they are based on a seniority system; a merit system; a system that measures earnings by quality or quantity of production; or “any other factor other than sex.” As my wife just pointed out, this is a pretty broad exception. The Governor and the Legislature agreed, which is why that language has been removed. Instead, employers can now base pay on “a bona fide factor other than sex, such as education, training or experience.” Furthermore, these criteria can only be used to the extent that they are related to the job in question.
It remains to be seen how great an impact this change in language will have on New York State workplaces. Here’s a good blog on the issue posted by Bond, Schoeneck and King.
On that note, enjoy your weekend. Personally, I have to remember what people do on Sunday afternoons without football.