Posts tagged ‘Fair Labor Standards Act’

HUD Proposes Reinstating Disparate Impact Rule

On Friday the Department of Housing and Urban Development (HUD) announced that it was proposing regulations to reinstate an Obama era regulation scuttled by the Trump Administration which was designed to outline what had to be proven by individuals claiming a violation of the Fair Housing Act which prohibits discrimination on the basis of race, color, sex, and other protected classifications. Given the level of political discourse in this country, I suspect there will be a great deal of emotional debate. Here is a primer on the actual issues involved:

The core issue is how expansive HUD’s authority is to interpret the FHA and the regulation being debated is 24 CFR 100.500 which outlines how disparate impact in the provision of housing can be proven. Behind this ostensibly esoteric announcement lurks one of the most emotional and important debates that the nation will be having in the coming years; one that I suspect will only grow more intense: how much proof should be required to prove housing discrimination and should intent matter where policies have the effect of discriminating against someone on the basis of race?

In 2013, HUD issued regulations designed to “implement the Fair Housing Act’s discriminatory effect standards” (78 FED. REG. 11460. 2013). Even the title was loaded. At the time some lawyers argued that disparate impact analysis was not even authorized under the FHA.  In 2015, this issue was addressed by the Supreme Court in Texas Dept. of Housing and Community Affairs v. Inclusive Communities Project. The Supreme Court ruled that it was within HUD’s authority to promulgate a disparate impact standard but the issue was still not settled. Ultimately, the Trump administration repealed these regulations and replaced them with a new standard that made it more difficult for plaintiffs to win (see 85 FR60288-01, 2020).

It was back to the courts again. A district court ruled that these regulations clearly made it more difficult for plaintiffs to prove discriminatory impact.  For example, these regulations required plaintiffs to “sufficiently plead facts” to support.  “[T]hat the challenged policy or practice is arbitrary, artificial, and unnecessary to achieve a valid interest or legitimate objective such as a practical business, profit, policy consideration, or requirement of law.” Massachusetts Fair Housing Center v. United States Department of Housing and Urban Development. In this decision, the federal district court in Massachusetts issued an injunction against the Trump era regulations.  Today you can still read these regulations, but they exist in a regulatory twilight zone with no one quite sure of what the legal standard is. 

There is undoubtedly more to come as the issues being debated ping pong between regulators and the courts. This is yet another issue that our system needs congress to resolve and its inability or unwillingness to do so creates a vacuum which leaves financial institutions unsure of what they can and cannot do.  

July 7, 2021 at 10:40 am Leave a comment

Are You Properly Paying Your Employees?

Good morning, folks. Here are some things to consider as you start your credit union day.

Are you properly paying your employees?

That’s the question that I’ve decided to bring to your attention this morning. After reading a complaint (subscription required) against Investor’s Bank in New Jersey in which employees seek to bring a class-action against a lender for violating the Wage and Hour Provisions of the Fair Labor Standards Act and corresponding New Jersey state law. In the lawsuit, the non-exempt employees were responsible for opening up the bank’s branches. As a matter of policy and procedure, this included going through several security protocols before logging on to their computers and officially clocking in. The employees are seeking back pay for the unpaid labor, as well as liquidated damages for what they contend is a willful violation of the law. Now, don’t get me wrong – there is nothing particularly novel about this lawsuit or its claims. However, labor law experts are quick to point out that wage and hour violations are one of the more common and expensive mistakes that employers can make. For what it’s worth, I also see cases like this accelerating now that so many more of your employees are clocking in remotely. 

High Noon for a Stimulus Bill

House Speaker Nancy Pelosi has given Republicans a Tuesday deadline for agreeing to new stimulus legislation before the elections. The question is, will President Trump, who seems more than willing to compromise on a higher stimulus number, be able to convince enough Senate Republicans to give him this win? Stay tuned, and let’s remember that this political discussion has real-life consequences for your credit union and membership. 

Sherrod Brown Sounds the Alarm

Speaking of bad economic conditions, David Baumann’s blog this morning gave me a heads up about a letter Senator Sherrod Brown, ranking member of the Senate Banking Committee, sent to financial regulators. The NCUA, along with others, received this correspondence expressing concern about the fragile state of the US economy and asking the regulators what they are doing to prepare for a potential economic meltdown. According to Brown, “‘Watchful waiting’ and deregulation are insufficient regulatory responses to the myriad stressors in the financial system.” He ends the letter with a series of questions he wants answers to by October 28th, including:

1. What compliance, operational, and other risks does the public health crisis pose to your agencies’ ability to handle a potential financial crisis? What concrete steps have your agencies taken individually and on a coordinated basis to address these risks?

 2. How are your agencies monitoring and addressing concentration risks with respect to leveraged lending, household and consumer debt, credit card debt, and the mortgage and commercial real estate markets? What are your agencies doing to monitor and address exposure to fragility in the funding markets, particularly the overnight repurchase market? What other emerging risks have you identified?

 3. What preparations have your agencies made if it needs to resolve failed banks or credit unions, including in a widespread failure scenario involving G-SIBs, large regional institutions, and community banks? What specific table-top exercises have your agencies participated in to ensure you are operationally prepared to wind-down a failing bank or credit union?

NCUA Needs Vendor Oversight, but Not Right Now

In my last blog about NCUA’s most recent board meeting, I forgot to point out that Chairman Hood reiterated his support for legislation which would give NCUA direct oversight over credit union vendors, but, he also noted that he did not think the reform should come while the industry deals with the pandemic. Stay tuned.

October 19, 2020 at 9:39 am Leave a comment

How Much Is Enough? White Collar FLSA Exemption To Be Reconsidered Again

The Trump Administration signaled yesterday that it planned on issuing new regulations setting the minimum salary level for employees to qualify for the so-called white-collar “exemption” from overtime rules mandated under the Fair Labor Standards Act.

If this sounds familiar it’s because we went through all this at the tail end of the Obama Administration. First, with apologies to those labor law experts out there, let’s review some of the basics. The Fair Labor Standards Act set a federal minimum wage for all employees and mandated that employees who work more than 40 hours a week must be compensated for that additional work (i.e. paid overtime). At the same time, the Act exempted from the overtime requirement employees who work in a bonafide executive, administrative or professional capacity who also make a certain minimum salary level. The minimum salary level for the so-called white-collar exemption was last updated in 2004 to $455 per week. In addition, there is also exemption from the overtime requirement for “highly compensated employees” which requires that the employee earn at least $100,000 in total compensation.

In 2016, the Obama Administration’s Department of Labor finalized regulations which, among other things, raised the minimum salary requirement for employees to be eligible for the white-collar exemption from $455 a week to $913 per week, which comes out to an annual salary of $47,476. The increase presented challenges to some credit unions that confronted the possibility of having to pay overtime for managers they previously classified as exempt, but who didn’t make enough to qualify for the white-collar exemption.

Fortunately for them, the regulation never took effect and the Trump Administration has repeatedly signaled its intention to revisit the issue. According to the Corporate Legal Update blog, which tipped me off to this update, proposed regulations are expected sometime in early 2019. But remember, as I noted, this is only a partial relief for those of us in New York.

Next year, the minimum salary for New York’s version of the white-collar exemption is scheduled to go up again next year. Remember, under New York’s approach, the minimum salary requirement varies by geographic area. For example, starting next January, the minimum salary for someone to qualify for New York City’s white collar exemption at a small employer would increase from $900 a week to $1,012.50 per week. In upstate districts, the minimum salary for the exemption increases from $780 per week to $832 per week. In Nassau, Suffolk and Westchester counties, the exemption threshold will increase to $900 per week from $825 per week.

Make sure you check with your labor law attorney to get a better feel of how these legal requirements will affect your credit union.

On that note, enjoy your weekend.


October 26, 2018 at 9:45 am Leave a comment

Do Your Supervisors Make $50,000?

If not, then they can no longer be classified as exempt employees and must get overtime. According to this morning’s news reports, that’s the core part of proposed regulations updating the Fair Labor Standards Act to be released by the Obama Administration’s Department of Labor later this week.

Under existing regulations, one of the conditions for an employee to be classified as exempt is that he or she makes a little more than $23,000. Critics point out that this threshold requirement is so low that it has allowed employers to contravene the intent of federal law by classifying an employee as the supervisor and expecting them to work 50-60 hour weeks without overtime pay. They argue that a $50,000 threshold simply adjusts the Act to where it would be had it kept pace with inflation.

Opponents of this well-meaning but fatally misguided view correctly point out that a $50,000 threshold won’t increase the salary of many employees, but simply decrease the amount of hours existing employees work and, in a best case scenario, encourage the hiring of more lower-paid employees.

To put this in practical terms, review a list of your exempt employees making less than $50,000 and estimate how many hours they work over 40 each week. Then figure out how much it would cost you to pay each of these employees time and one-half for these hours. This is how much the federal government effectively wants to tax you. Occasionally, it makes me wonder if we live in a capitalist country.

June 30, 2015 at 7:54 am Leave a comment

Did you violate the law this weekend?

Here is a Monday morning survey: 

  • Did you send out any e-mail to any of your employees over the weekend? 
  • Were those salaried employees? 
  • Did you violate the Fair Labor Standards Act? 
  • Can you imagine waking up with a lawyer every morning? 

There’s a great post this morning from the Harvard Business Review providing tips on how to better manage our e-mail addiction.  But the part of the post that most intrigued me was its reference to the fact that as overtime disputes become more common, the role that smart phones play in our workplace needs to be better regulated by many businesses.  For example, if you were watching your kid’s soccer game on Saturday, and sent an email asking your loan originator if a certain mortgage was approved, or if you contacted your secretary at 7:00 a.m. asking that a memo be sent, depending on the status of those employees, the time they spent on those projects should be counted against the 40-hour work week over which they are entitled to overtime.  As a matter of fact, last week U.S.A. Today reported that after years of layoffs, employees are bringing an increasing number of law suits alleging  misclassification of non-exempt employees as exempt employees with resulting overtime violations.

And remember there are special concerns in the financial sector since the Department of Labor has opined that most mortgage loan officers are non-exempt employees.  So what steps should we be taking to address these issues?  The most important one is to have strict policies as to which employees have access to company cell phones.  Remember, if there is simply no need to contact an employee outside of the workplace, then they shouldn’t need a phone.  Second,  policies should make clear who has access to cell phones and also include a reminder to supervisors that responding to email constitutes work.  Finally, the question as to who is and who is not an exempt vs. no-exempt employee is not as clear cut as you may think.  Depending on the size and complexity of your credit union, now would be a good time to sit down with your HR Professional and analyze the specific responsibilities of your employees to ensure that their classifications are correct.


April 30, 2012 at 7:15 am 2 comments

Authored By:

Henry Meier, Esq., Senior Vice President, General Counsel, New York Credit Union Association.

The views Henry expresses are Henry’s alone and do not necessarily reflect the views of the Association. In addition, although Henry strives to give his readers useful and accurate information on a broad range of subjects, many of which involve legal disputes, his views are not a substitute for legal advise from retained counsel.

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