DOL clarifies FLSA’s “amusement or recreational establishment” exemption

On January 15, 2021, the Wage and Hour Division (WHD) of the US Department of Labor issued opinion letter FLSA2021-3. The letter explores the scope of Section 13 (a)(3) of the Fair Labor Standards Act (FLSA), which creates an exemption from the minimum wage and overtime provisions for “an employee employed by an establishment which is an amusement or recreational establishment, organized camp, or religious or non-profit educational conference center.” In addition to meeting this definition, an entity must satisfy either a “calendar test” or a “receipts test,” designed to limit the exemption to employees of truly seasonal operations.

Examining three different entities, the WHD concluded as follows:

  • In order to be an “establishment” under Section 13 (a)(3) of the FLSA, an entity must have a distinct physical location for its recreational operations. An entity that organizes and leads nature walks, hikes, daytrips, and overnight camping trips for children does not meet this definition. The entity has a recreational character and purpose. However, it maintains an office solely for administrative purposes; its trips do not meet, leave from, or return to that office. Therefore, its recreational operations do not have a “distinct physical location” over which it exerts control as required to satisfy the “establishment” exemption.
  • A non-profit religious ministry that runs a year-round camp/ retreat center and uses an accrual method of accounting cannot satisfy the “receipts” test under Section 13 (a)(3) of the FLSA. To qualify for the exemption, an entity must show that during the preceding calendar year, its average receipts for any six months of the year were not more than 33 ⅓ percent of its average receipts for the other six months of that year (of note, the months need not be consecutive). For purposes of the FLSA exemption, “receipts” means money actually received and does not incorporate accrual accounting principles. Furthermore, “receipts” under Section 13 (a)(3) refers to money received in exchange for goods or services and does not include charitable donations.
  • An entity that plans and produces thousands of events at various locations each year for companies, non-profits, and other organizations is not an “establishment” under Section (a)(3) of the FLSA. While it maintains a warehouse and administrative offices, it does not exert control, even for a limited period, over fixed locations that have amusement or recreational character. It simply helps produce events on premises that are held and controlled by its clients.

While WHD opinion letters can provide valuable guidance to covered employers, they are based upon the facts of the specific case presented. Therefore, the scope of their legal impact is often uncertain. Employers whose seasonal employees may qualify for the “amusement or recreational establishment” exemption should work closely with legal counsel to determine whether the exemption is likely to apply.
We continue to closely monitor developments in this area and will provide you with important updates.

Lake Effect is here to answer your questions about federal and state issues affecting employers. We continue to monitor important legal and HR developments, as well as COVID-related updates from federal, state, and local authorities. Please keep watching our blogs and emails for these important updates, as well as discussions of how compliance meets culture. To dive into these issues, contact us at info@le-hrlaw.com or 1-844-333-5253.

State Employment Laws to Consider with Remote Workers

Employers across the country – from small nonprofits to multi-national corporations – are grappling with whether and how to maintain a remote workforce with employees in multiple states. There are distinct advantages to allowing employees to work from their home, wherever that may be, and opening the applicant pool to a remote workforce. (See our previous blog on how to sustain company culture with a remote workforce.)

When evaluating remote employment plans, it is critical for employers to review the state and local laws that apply to workers outside of Wisconsin. Many of those laws apply even if an employer has only one part-time employee working in the remote location. Below are some of the important legal issues to consider:

  • Paid Sick Leave. States and municipalities across the country have enacted mandatory paid sick leave laws, most of which apply to all employees working in the particular state, county, or city. An employer’s PTO policy generally will comply with the paid sick leave law if the PTO provides a specified minimum level of benefits. However, employers should review the specifics of any relevant paid sick leave laws, including the laws’ required notices to employees. Those notices may need to be included in a handbook and/or with paystubs.
  • Paid Family and Medical Leave. At least nine states and the District of Columbia have also enacted mandatory paid family and medical leave laws that apply to all part-time and full-time employees working in the state or district. The leave programs differ in the amount of leave that must be provided, benefits, eligibility requirements, required notices, and how the programs are funded. Employers should review these laws if applicable and ensure their leave policies comply.
  • Employee agreements. State laws vary dramatically as to the enforceability of non-competition and non-solicitation agreements. Most states require these agreements to include limitations on their geographic scope and length of restriction. Some states also require employers to give the employee something, such as a bonus or promotion, in exchange for signing a non-compete or non-solicitation agreement while others require specific language be included in these agreements. Some states prohibit all non-competes (D.C. is currently considering such legislation) while some prohibit non-competes with employees who are paid below a specified wage threshold. To reduce the risk of an employee agreement being struck down by a court, it is important to review the applicable state laws and incorporate all requirements.
  • Pay history and criminal background checks. When recruiting nationwide, employers should ensure they are complying with the growing number of laws limiting or prohibiting inquiries into an applicant’s pay history or criminal background. These laws were largely enacted to create more opportunities for women and people of color. They also reflect HR best practices. Inquiring into pay history and/or criminal background may unnecessarily limit the applicant pool and hinder efforts to create a more inclusive workplace culture.
  • Anti-harassment training. At least six states, including Illinois, require employers to provide anti-harassment training to employees and supervisors working in their state. Other states encourage, but do not require, anti-harassment training. Even if not legally required or encouraged, we recommend employers provide anti-harassment training at least every other year.
  • Business Expenses. As more employees are working from home, employers should review their business expense policies for compliance with the laws of the state in which employees work. For example, California and Illinois have specific laws on what business expenses must be reimbursed by an employer.
  • Drug testing. Drug testing laws vary from states such as Minnesota, with strict policy and process requirements to states such as Wisconsin where the laws are more lenient. Employers who require drug tests also should take into consideration whether the recreational and/or medicinal use of marijuana has been legalized in the state where the employee works. Over 30 states and municipalities have legalized marijuana in some form.
  • General employment laws. Each state has enacted its own general employment laws covering, for example, minimum wage, other wage and hour requirements, workplace safety, workers’ compensation, unemployment insurance, and anti-discrimination. Employers should review these laws and ensure their employee handbook, policies, trainings, and practices are in compliance.

Lake Effect is here to answer your state and federal employment law and HR questions related to a remote workforce. We continue to monitor important legal and HR developments, as well as COVID-related updates from federal, state, and local authorities. Please keep watching our blogs and emails for these important updates, as well as discussions of how compliance meets culture. To dive into these issues, contact us at info@le-hrlaw.com or 1-844-333-5253.

DOL Issues Final Rule on Independent Contractor Status under FLSA

***Update, January 27, 2021***

UPDATED BY EXECUTIVE ORDER – CLICK HERE FOR UPDATED INFORMATION

****

On January 6, 2021, the US Department of Labor announced a final rule establishing the test for whether a worker will be classified as an independent contractor or an employee under the Fair Labor Standards Act (“FLSA”). The final rule adopts the “economic reality” test, which was set forth in the DOL’s proposed rule published in September 2020. Under that test, the two core factors are the nature and degree of control over the work and the worker’s opportunity for profit or loss. For a full discussion of that test, these key factors, and other relevant considerations, please review Lake Effect’s September 22, 2020 blog on the DOL’s proposed rule. The final rule also reiterates that the actual practice of the employer and the worker will govern the inquiry, not contractual language or theoretical possibilities.

The final rule will be published in the Federal Register on January 7, 2021 and take effect on March 8, 2021.

Keep in mind that DOL’s final rule is unlikely to fully resolve this challenging issue for most employers. Many states have adopted their own tests for independent contractor status, and these can vary widely from state-to-state, and even within a state, depending upon the issue being addressed (i.e., unemployment eligibility, wage and hour, tax liability). Lake Effect continues to monitor federal and state laws and guidance relating to independent contractor status, and we will keep you apprised of developments in this area.

Lake Effect is here to answer your questions about independent contractors, FLSA, and labor laws. We continue to monitor important legal and HR developments, as well as COVID-related updates from federal, state, and local authorities. Please keep watching our blogs and emails for these important updates, as well as discussions of how compliance meets culture. To dive into these issues, contact us at info@le-hrlaw.com or 1-844-333-5253.

Lake Effect HR & Law is in business to maximize each client’s workplace potential with a commitment to kindness, true partnership, and exceptional service.

DOL Issues Timely Wage and Hour Rule and Guidance

***Update, January 27, 2021***

UPDATED BY EXECUTIVE ORDER – CLICK HERE FOR UPDATED INFORMATION

****

Over the last few weeks, the Department of Labor (DOL) has been busy ticking items off its to-do list. We have seen action on everything from tip pooling to employee notices to travel time.

Tip Pooling and Tip Credits
In October, 2019, Lake Effect blogged on the Department of Labor’s (DOL) proposed new Fair Labor Standards Act (FLSA) regulations on tip pooling, tip credit, and payments to tipped employees. The DOL published the Final Rule on December 22, 2020, implementing most of the changes to tip pooling and tip payments that were proposed in 2019. See also a helpful summary and FAQ provided by the DOL. The Final Rule is effective March 1, 2021.

This new rule will be helpful for restaurant, bar, and hospitality employers making plans to expand or resume operations in the coming months. Many hospitality employers have implemented – or may now consider implementing – tip pools to supplement employee compensation, improve morale, and incentivize all workers to maximize performance. In short, tip pooling can be a useful tool to enhance employee recruitment and retention.

The new tip credit and tip pooling regulations include the following:

  • No tips for managers, supervisors, or employers: The regulations expressly prohibit employers from keeping employees’ tips and likewise prohibit managers and supervisors from sharing any employee tips, regardless of whether the employer takes a tip credit and regardless of the type of tip pool implemented. Employers who retain pooled tips or share them with managers or supervisors will be subject to civil penalties under the new regulations.
    • Relying on the FLSA duties test, a manager or supervisor is defined as any employee (1) whose primary duty is managing the enterprise or a customarily recognized department or subdivision of the enterprise; (2) who customarily and regularly directs the work of at least two or more other full-time employees or their equivalent; and (3) who has the authority to hire or fire other employees, or whose suggestions and recommendations as to the hiring or firing are given particular weight.” This also includes any workers “who own at least a bona fide 20 percent equity interest in the enterprise in which they are employed and who are actively engaged in its management.”
  • No 80/20 rule for tip credits: The regulations remove the long-standing 80/20 rule that required employers who take a tip credit (see our prior blog for an overview of tip credits) to carefully track the amount and timing of non-tipped work that employees perform. Under the new regulations, employers may take the tip credit regardless of the amount of non-tipped work an employee is performing provided the normally non-tipped work is performed “contemporaneously with” or “for a reasonable time immediately before or after” their normally tipped work duties.
  • Employers who take a tip credit are limited to a traditional tip pool: Employers who take a tip credit may create only a “traditional tip pool,” which is limited to employees who “customarily and regularly” receive tips.
  • Employers who do not take a tip credit have two tip pool options: Employers who do not take a tip credit now have two options for tip pooling. Employers may create a “traditional tip pool” and/or a “nontraditional tip pool,” which includes employees who do not regularly receive tips, such as cooks and dishwashers.
  • Record-keeping of tip credit and tip pool: Employers who take a tip credit or create tip pools must identify on their payroll records each employee who receives tips and maintain records of the weekly or monthly amount of tips received by employees, as reported by the employee to the employer. Employers can rely on employees’ information tracked on IRS Form 4070.
  • Timing of payment of tip pool tips: Employers must pay their employees the pooled tips no later than the date on which regular wages are paid to employees and, for credit card based tips, “as soon as practicable after the regular payday.” This further supports the requirement that employers must not retain tips.

Electronic Posting of Required Labor Law Posters
Acknowledging that telework will likely continue for the foreseeable future in many workplaces, the DOL provided new guidance regarding labor law posters. In a field assistance bulletin issued on December 29, 2020, the DOL confirmed that employers can satisfy applicable employee notice obligations by providing required labor law postings to employees on the internet or an intranet. Employers also must display hard copies of the posters in the actual workplace for applicants and employees who are unable to telework.

Compensation for Personal Activity Travel Time
Again acknowledging the continuation of telework, the DOL issued a wage and hour opinion letter on December 31, 2020 addressing the issue of travel time to/from work and home when an employee works part of the day remotely and part of the day in the worksite, and engages in personal activities during their travel time. The DOL reiterated that a non-exempt employee does not need to be paid for time the employee is off duty and is not working, nor for commuting time. The DOL also reinforced that the continuous workday doctrine would not apply to the fact patterns presented by the employer because, during the travel time for personal activities, the employee was clearly off duty, could use their time for their own purposes, and could choose when they would resume work at home or at the worksite. Likewise, the employee’s commuting time to and from work, during which time the employee performed no work duties, was not compensable commuting time.

~~~~
For additional information and discussion of DOL rule making, rules, and guidance, please see Lake Effect’s prior blogs on wage and hour issues. We will continue to closely monitor all developments in this area and provide you with important updates.

Lake Effect is here to answer your questions about federal and state issues affecting employers. We continue to monitor important legal and HR developments, as well as COVID-related updates from federal, state, and local authorities. Please keep watching our blogs and emails for these important updates, as well as discussions of how compliance meets culture. To dive into these issues, contact us at info@le-hrlaw.com or 1-844-333-5253.

Lake Effect HR & Law is in business to maximize each client’s workplace potential with a commitment to kindness, true partnership, and exceptional service.

Dane County Public Health Emergency Order #10

UPDATE 11/22/20

On November 20, 2020 PHMDC amended the definition of “mass gathering” under Amended Emergency Order #10. A mass gathering is now “any gathering of individuals that are not members of the same household or living unit.”

UPDATE 11/17/20

Starting Wednesday, November 18, in Dane County, all indoor mass gatherings are banned and all outdoor mass gatherings are limited to no more than 10 individuals under Public Health Madison & Dane County (PHMDC) Emergency Order #10. Sports activities, group exercise classes, meetings, and trainings are subject to the same mass gathering restrictions. The order expires on December 16.

As a reminder, a mass gathering is “a planned event with a large number of individuals in attendance, such as a concert, festival, meeting, training, conference, performance, show, or sporting event. Individuals that are members of the same household or living unit do not count towards the mass gathering numbers.”

The other requirements from previous PHMDC emergency orders remain in place. You can find Lake Effect’s summaries of the previous orders here.

Lake Effect is here to answer your questions about how local and state public health orders apply to employers. We continue to monitor important legal and HR developments, as well as COVID-related updates from federal, state, and local authorities. Please keep watching our blogs and emails for these important updates, as well as discussions of how compliance meets culture. To dive into these issues, contact us at info@le-hrlaw.com or 1-844-333-5253.

Employee Holiday Travel during COVID-19

Traditionally, November and December are months when employees take more time off to travel and/or spend time with family and friends for holidays. This year, employers and employees need to consider the health risks involved in traveling and group gatherings due to the COVID-19 pandemic. The reality is that employees’ increased exposure to COVID-19 can present risks to co-workers, customers, and the overall reputation of an organization.

We encourage employers to review current policies regarding time off during the holidays to see if they reflect current practices and current COVID risk mitigation measures. As with any issue related to the pandemic, employees and employers should adhere to current guidance provided by the CDC, as well as local and state guidelines in their home area and in any areas they may visit. The CDC website has valuable information related to Travel During the COVID-19 Pandemic, as well as a page specifically related to Holiday Travel. Although employers cannot dictate whether or not an employee travels during non-work time, employers are well-advised to share this information with employees so they fully appreciate the risks involved with travel and gatherings.

In the event that employees are exposed to or test positive for COVID-19 during the holiday season, employers should consult this helpful resource provided by PHMDC.

Lake Effect is here to answer your questions about protecting your workforce and complying with state and local public health orders. We continue to monitor important legal and HR developments, including COVID-related updates from federal, state, and local authorities. Please keep watching our blogs and emails for these important updates, as well as discussions of how compliance meets culture. To dive into these issues, contact us at info@le-hrlaw.com or 1-844-333-5253.

Governor Evers Recommends Continued COVID Mitigation Efforts

On November 10, 2020, Governor Evers presented a public address and signed Executive Order #94, strongly advising that all residents and businesses continue following stringent COVID-mitigation efforts. While this order has no enforcement capability, it serves as a reminder to minimize interactions outside of households. For businesses, it provides no new restrictions, but it reiterates the importance of permitting employees to work from home wherever feasible and maintaining preventive measures in the workplace for employees and customers alike.

Lake Effect is here to answer your questions about protecting your employees and complying with state and local public health orders. We continue to monitor important legal and HR developments, including COVID-related updates from federal, state, and local authorities. Please keep watching our blogs and emails for these important updates, as well as discussions of how compliance meets culture. To dive into these issues, contact us at info@le-hrlaw.com or 1-844-333-5253.

Close Contact in the Workplace: Think 6-15-24-48

blank

The CDC has updated its definition of “close contact” and it is now referred to as the “6-15-24-48 analysis.” The updated guidance defines a “close contact” as someone who was:

  • within 6 feet of an infected person
  • for a cumulative total of 15 minutes or more
  • over a 24-hour period
  • starting from two days (48 hours) before illness onset (or, for asymptomatic patients, two days prior to test specimen collection) until the time the patient is isolated.

Employers who have employees experiencing COVID-related symptoms or who have tested positive for COVID should ask the employee to identify others with whom they were in close contact as described above. Note, the new definition now includes individuals with whom the employee was in contact for shorter periods of time that add up to 15 minutes or more within a 24 hour period. For example, this would cover contacts lasting five minutes at lunch, five minutes at the end of the workday, and 5 minutes the next morning.

As employers continue to monitor and respond to COVID-related situations in the workplace, they should update internal policies and procedures to match the current CDC guidelines, as well as guidance from their state or local public health departments or health orders.

As a reminder, these are the current CDC-designated symptoms of COVID-19:

  • Fever or chills
  • Cough
  • Shortness of breath or difficulty breathing
  • Fatigue
  • Muscle or body aches
  • Headache
  • New loss of taste or smell
  • Sore throat
  • Congestion or runny nose
  • Nausea or vomiting
  • Diarrhea

Lake Effect is here to answer your questions about employer compliance with state and local public health orders. We continue to monitor important legal and HR developments, including COVID-related updates from federal, state, and local authorities. Please keep watching our blogs and emails for these important updates, as well as discussions of how compliance meets culture. To dive into these issues, contact us at info@le-hrlaw.com or 1-844-333-5253.
Lake Effect HR & Law is in business to maximize each client’s workplace potential with a commitment to kindness, true partnership, and exceptional service.

OSHA Issues Guidance on Reporting Work-Related COVID-19 Hospitalizations and Deaths

On September 30, 2020, OSHA published new guidance on employers’ obligations to report employee in-patient hospitalizations and fatalities resulting from work-related cases of COVID-19.

Employers must report hospitalizations with 24 hours: In order to be reportable, an employee’s in-patient hospitalization due to COVID-19 must occur within 24 hours of exposure to the virus at work. If the hospitalization occurs later, it is not reportable. Furthermore, an employer’s duty to report is triggered when the employer knows both that the employee has been hospitalized and that the reason for the hospitalization was COVID-19 exposure at work within 24 hours prior to hospitalization. Once the employer knows both, it has 24 hours to report the hospitalization.

Employers must report fatalities within 8 hours: In order to be reportable, a fatality caused by COVID-19 must occur within 30 days of exposure to the virus in the workplace. If the death occurs later, it is not reportable. Furthermore, an employer’s duty to report arises when the employer knows both that the employee has died of COVID-19 and that the cause of death was work-related exposure to the virus within the prior 30 days.  Once the employer knows both, it has 8 hours to report the fatality.

Notably, the guidance does not specify how employers should decide whether or not a COVID-19 exposure was work-related for purposes of reporting hospitalizations or fatalities. Therefore, employers are left to follow prior OSHA guidance issued in May 2020 as to “whether it is more likely than not that exposure in the workplace played a causal role with respect to a particular case” of COVID-19.

An employer may report a work-related COVID-19 hospitalization or death in any of the following ways:

  • Calling the nearest OSHA office
  • Calling the OSHA 24-hour hotline at 1-800-321-OSHA (6742); or
  • Reporting online.

OSHA-covered employers must record all work-related confirmed cases of COVID-19.  See Lake Effect’s prior blog on this topic.

Lake Effect is here to answer your questions about OSHA reporting obligations relating to COVID-19. For a deeper dive into this issue, contact us at info@le-hrlaw.com or 1-844-333-5253. We continue to monitor important legal and HR developments, as well as COVID-related updates, from federal, state, and local authorities. Please keep watching our blogs and emails for the latest information.

Lake Effect is committed to helping your organization maximize its workplace potential, ensuring compliance while preserving your unique culture.

UI Notice Required at Time of Separation of Employment

Beginning November 2, 2020, Wisconsin employers must notify employees at the time of separation from employment of the availability of Unemployment Insurance (UI) benefits. Notice of unemployment rights can be given to employees by email, text message, letter, or by providing the DWD printed poster in person or by mail.

The content of the notice should include when and how an employee can file for unemployment, unemployment resources, and UI contact information. The DWD provides suggested language to include in end of employment communications to employees, including the digital poster. We encourage employers to use the suggested language and the customizable digital poster. This poster needs to be posted at all times in your workplace or electronically in the case of remote workers.

Note that providing the notice does not necessarily mean that employees will meet the requirements of the Wisconsin UI eligibility laws and/or receive benefits.

Lake Effect is here to answer your questions about employee onboarding, offboarding, or compliance with applicable state and federal employment laws. We continue to monitor important legal and HR developments, as well as COVID-related updated from federal, state, and local authorities. Please keep watching our blogs and emails from us for important legal updates and HR best practices. Contact us at info@le-hrlaw.com or 1-844-333-5253.

Lake Effect HR & Law, LLC
(844) 333-5253 (LAKE)
info@le-hrlaw.com

LakeEffectWhite-footer2

© 2020 Lake Effect HR & Law, LLC