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Searching for Articles published in July 2015.
Found 10 Results.

What is the Overtime Proposal and Why Should I Care?

Posted on July 7, 2015, Authored by Sara J. Ackermann,

By now you probably have heard that the U.S. Department of Labor (DOL) has issued a “proposed rule and request for comments” regarding overtime eligibility.  For those of you who want to chat intelligently about this topic at cocktail parties—but would prefer not to read the entire 295-page proposal—we offer the following FAQ: What is the big deal about this proposal? While the proposed rule contains many provisions, its affect on overtime eligibility is the most controversial.  Under current law, an employer need only pay certain white collar employees $455 per week ($23,660 annually) to avoid paying overtime.  The new proposal calls for an increase in the current minimum salary threshold to $970 per week ($50,440 annually), with automatic threshold increases thereafter.  The DOL estimates that this change will affect nearly 5 million workers who currently are not eligible for overtime. By way of example, in many industries (e.g, retail, fast food, gas stations) it is not uncommon for managers to earn annual salaries far below the proposed $50,440.  If the rule becomes final, employers will need to either increase manager salaries or be prepared to pay overtime to those workers. Where does the DOL get the authority to issue this proposal? The DOL cannot create new law.  The Fair Labor Standards Act (FLSA) is the law that guarantees minimum wage and overtime for certain workers.  However, the FLSA, passed by Congress and signed into law by President Franklin D. Roosevelt in 1938, specifically gives the DOL the authority to “define and delimit” the terms of the FLSA that exempt certain workers from overtime pay.  Since 1938, the DOL has updated the exempt salary level requirements 7 times, most recently in 2004.   So, the DOL can change the rules however it wants regarding overtime? Not quite.  The DOL’s rulemaking authority is limited.  After a rule becomes final, individuals and corporate entities may go to the courts to make a claim that a rule is unconstitutional, was made without following the notice‐and‐comment process, was arbitrary, or an abuse of discretion.  In sum, the courts have the power to trump the DOL and invalidate a rule if the DOL goes beyond the authority delegated by the FLSA. What happens next? In the coming days, the proposed rule will be published in the Federal Register (a/k/a the Federal government’s newspaper).  This will trigger a 60-day “comment period.”  Any member of the public can submit a comment regarding the proposed rule.  The DOL will review all the comments.  If the comments include excessive questions and/or or criticisms, the DOL may decide to terminate the proposal or change aspects of the rule to reflect these new issues.  If the changes are major, the DOL could publish a “supplemental” proposed rule.  If the changes are minor the agency may proceed with publication of the final rule.  Comments can be submitted electronically at How long is all this going to take? It is difficult to predict how long it will take for the DOL to review submitted comments.  In general, the process from proposed rule to final rule can take a year or longer. What should employers do now?   Now is a good time for employers to audit all positions to make sure employees are properly classified as exempt/non-exempt in accordance with current law.  The widespread press about the proposed rule might cause employees to question whether they are currently eligible for overtime.  For more information on how to make sure you are compliant with the FLSA, contact your favorite employment law attorney.

One Instance of Racial Harassment Can Be Enough

Posted on July 21, 2015, Authored by Dean R. Dietrich,

Harassment and discrimination in the workplace continue to be evolving areas of law.  In most U.S. jurisdictions, the rules seem to be fairly well-established as fair and balanced for both employer and employee.  However, when the right case comes along, the balance can shift, and new standards can be adopted that favor one party over the other.  The following case provides another example of how the courts have tipped the balance in favor of employees.  On May 7, 2015, the U.S. Court of Appeals for the Fourth Circuit issued an opinion in Boyer-Liberto v. Fontainebleau Corp. that made three modifications to how the courts should analyze Title VII racial harassment and hostile workplace retaliation claims.  First, the court overturned the standard that a single instance of the use of a racial slur could not be severe or pervasive enough for a jury to find harassment.  Now, so long as the instance is physically threatening or humiliating, a single utterance of a racial slur could be considered severe enough to create a hostile work environment. Second, the court expanded the class of harassing supervisors to include any co-worker that has a position of influence and various other versions of a quasi-supervisor, which could include team leaders, group leaders, or even assistant-assistant managers.  Third, the court found, specific to hostile workplace retaliation claims, a worker’s complaint about a single instance could be a legally protected activity even if the jury doesn’t find that the workplace conduct reaches the level of “severe” that is otherwise required for a valid harassment claim.  Now, to have cause to file a complaint over protected activity, the employee only needs to have a reasonable belief based on a single instance that an action was undertaken to create a hostile work environment. How does this affect employers in Wisconsin? Technically, nothing changes in Wisconsin…yet.  Decisions in the 4th Circuit do not create binding law in the other circuits, nor in state courts.  However, if new cases challenge these or similar issues, the reasoning of the 4th Circuit is persuasive and may be relied upon to refine the laws governing this type of activity.  On the issues mentioned above, the State of Wisconsin has not strayed from the guidance provided by Title VII and the U.S. Supreme Court.  Here is a brief reminder of the current law in Wisconsin as it relates to the three issues noted above: On the first issue of whether a single instance of racial discrimination is enough, the U.S. Supreme Court has held that an isolated incident of harassment, if extremely serious, can create a hostile work environment.  Wisconsin state courts have not ruled to the contrary. On the second issue of who is considered a supervisor, the U.S. Supreme Court says a supervisor must have the power to effect a significant change in employment status, such as hiring, firing, failing to promote, reassignment with significantly different responsibilities, or a decision causing a significant change in benefits.  Consistent with that, the Wisconsin Fair Employment Act contemplates liability for supervisory employees only.  The definition of supervisory has been interpreted by the courts to mean any other employee who has the authority to hire, transfer, discipline or discharge the plaintiff.  To the extent that the other employee supervises anything, if they oversee activities the plaintiff is to do, not the plaintiff herself, such a person is a coworker rather than a ‘supervisor’ within the meaning of the Fair Employment Act.   On the third issue of whether an employee’s claim of retaliation will be protected even if the conduct involved does not rise to the level of being severe enough to be determined by a jury to present a valid harassment claim, the courts are likely to find that if the worker has a reasonable belief that he or she was engaged in a protected activity (such as filing a complaint with a supervisor for unlawful conduct) and can show a causal connection to that activity and an adverse employment action (such as a demotion, decrease in pay, or termination), he or she would have a valid claim. What should employers do right now? As this case shows us, just one severe comment or action could lead to a viable hostile work environment or retaliation lawsuit.  It is a good idea to make sure you are up to date on all of your workplace harassment training, especially for anyone in a management or leadership role.  As an employer, you should be extremely mindful of what you and your supervising employees say to employees.  It is a good idea to ask the following three questions: Do you have policies relating to harassment and discrimination? When was the last time you made sure your policies on anti-discrimination and anti‑harassment are compliant with the current law? When was the last time you held training for your managers, supervisors, and other leaders within your organization relating to proper handling of reports of harassment and discrimination? If you are not sure about the answer to any of these questions, it may be an indication that it is time to revisit what you can do to protect your company. Private employers who would like to incorporate best practices for avoidance of harassment in the workplace should contact Attorney Dean Dietrich, the author of this update, or any of the attorneys within the Employment, Benefits & Labor Relations Practice Group of Ruder Ware.

Hey Employers! The DOL is Watching—Are Your Workers Properly Classified?

Posted on July 28, 2015, Authored by Sara J. Ackermann,

On July 15, 2015, the U.S. Department of Labor (“DOL”) released an administrative interpretation that addresses the standard under the Fair Labor Standards Act (“FLSA”) for properly classifying workers as employees or independent contractors.  While there has been a great deal of buzz surrounding this release, specifically over the DOL’s statement that “most workers are employees under the FLSA’s broad definitions,” it is important to note that the release does not change the standard for classifying workers under the FLSA.  Rather, the DOL’s administrative interpretation is simply a restatement of how the DOL classifies workers under the FLSA and provides practical examples for employers to model. All workers fall into one of two categories: independent contractor or employee. Because an independent contractor avoids many of the wage/hour, tax and other employment law requirements of an employment relationship, the IRS, DOL, and multiple state government agencies construe independent contractor status narrowly and impose large penalties for improper classification.  Specifically, the DOL is interested in whether a worker is properly classified as an employee so as to receive the benefit of overtime and minimum wage. Over the last several years, the DOL has published numerous releases about the issue of worker misclassification within the U.S., which the DOL views as “one of the most serious problems facing affected workers, employers, and the entire economy.”  Due to this belief, the DOL has made it a priority to educate employers on proper worker classification as well as to aggressively pursue violators.  Bottom Line for Wisconsin Employers: The recent DOL release should be taken as a warning.  The DOL takes worker misclassification seriously and will actively pursue employers who incorrectly classify workers.  Employers that utilize independent contractors should conduct an internal audit to make sure they are classified properly.  For assistance with independent contractor agreements, determining proper classification, and handling a misclassified worker, contact your favorite employment law attorney.

Warning: Independent Contractors May Be Employees

Posted on July 22, 2015, Authored by Dean R. Dietrich, Filed under Employment

The Administrator of the US Department of Labor has issued guidance on determining whether an individual is an independent contractor or an employee of a company.  This Interpretive Guidance goes a long way to declaring that the Department of Labor will be aggressively reviewing determinations of independent contractor status by a company and will likely find that many independent contractors are really employees of the company.  Any company that uses independent contractors as part of their production workforce must be careful because of the aggressive stance being taken by the Department of Labor. The new Administrator of the Department of Labor (David Weil) is an outspoken critic of independent contractor agreements and has published a 15-page interpretation guidance document describing the criteria that will be looked at by the Department of Labor when considering whether an individual is an independent contractor to the company or an employee of the company.  The Department of Labor will rely upon the “economic realities test” and look to see whether the individual is dependent upon the company for income instead of being dependent upon the individual’s business as the primary source of income.  The Department of Labor will look at the following factors when analyzing whether an individual is a true independent contractor: The work performed is or is not an integral part of the employer’s business; The worker’s managerial skills affect the opportunity for profit or loss by the individual; The worker is hired on a permanent basis or an indefinite basis; The worker’s investment to engage in work is relatively minor as compared to the employer’s investment in providing work for the individual; The worker exercises business skills, judgment and initiative in the performance of work; and The worker has meaningful control over various aspects of the work performed. The Interpretive Guidance went into great detail about these six factors and suggests the employer must be aggressive in showing the individual is not reliant or dependent upon the company for satisfying the various elements of these factors.  Companies must be wary of the position of the Department of Labor when looking to determine whether or not a particular person is an employee of the company rather than an independent contractor performing work for the company.

The DOL Has Had a Busy Summer!

Posted on July 28, 2015, Authored by Sara J. Ackermann, Filed under Employment

The DOL has had a busy summer!  From proposed overtime rules to independent misclassification warnings, the prudent employer should take notice.  For more information, see my two recent legal updates: Hey Employers! The DOL is Watching - Are Your Workers Properly Classified?, and What is the Overtime Proposal and Why Should I Care?

Milwaukee’s Ordinance on Residency Remains Enforceable

Posted on July 23, 2015, Authored by Ruder Ware Attorneys, Filed under Local Governments and School Districts

The Wisconsin Court of Appeals ruled on July 21, 2015, that the City of Milwaukee’s ordinance requiring all city employees to live within the City of Milwaukee remains enforceable and is not superseded by a state statute abolishing local residency requirements.  The statute, Wis. Stat. §66.0502, became effective July 2, 2013, and prohibits local governments from enacting and enforcing residency requirements as a condition of employment, except for law enforcement, fire, or emergency personnel who could be required to reside within fifteen miles of the boundaries of a municipality.  The appellate court agreed with the City of Milwaukee’s position that the statute violates the Wisconsin Constitution’s home rule amendment.  The home rule amendment provides that any state law must yield to a city or village law unless it involves a matter of statewide concern and it affects every city or village uniformly.  The court found that there was insufficient evidence in the record to conclude that the state law was drafted with municipalities in mind other than Milwaukee.  Because of the evidence and legislative drafting focus on Milwaukee, the court held that the state law did not involve a matter of statewide concern.  As to uniformity, the court noted while the statute does not single out any particular municipality, it will have an unusually large-sized impact on the City of Milwaukee.  Regardless of the statute’s language, the court concluded the evidence shows that only Milwaukee will be deeply and broadly affected.  Therefore, the court found that the statute does not meet the uniformity requirement. This decision applies to the City of Milwaukee’s residency requirements.  It leaves open whether other cities or villages can rely on this decision to adopt a residency ordinance.  According to one media report, a petition for review to the Wisconsin Supreme Court is anticipated.    

2016 WRS Contribution Rates

Posted on July 9, 2015, Authored by Ruder Ware Attorneys, Filed under Local Governments and School Districts

The Wisconsin Department of Employee Trust Funds (ETF) recently set the 2016 Wisconsin Retirement System (WRS) required contribution rates for employers and employees.  Most employers and employees will see a slight decrease in rates.   For general and teacher employees the WRS contribution rates will be 6.6% for both the employer and the employee, a decrease from the 2015 rate of 6.8%.  For protective service employees with social security and for protective service employees without social security, their contribution rates will be 6.6%, a decrease from the 2015 rate of 6.8%.  The employer contribution rates for protective employees with social security will be 9.4%, a decrease from the 2015 rate of 9.5%, while the employer contribution rate for protective employees without social security will be 13.2%, an increase from the 2015 rate of 13.1%.  These contribution rates may be different for protective employees with collective bargaining agreements. The ETF notes that while there are many factors affecting WRS contribution rates, the decrease for 2016 is primarily due to trust fund positive investment returns. With these rates now announced for 2016, municipal employers are in a better position to prepare their 2016 municipal budgets.             

Fairly Debatable IME Report Defeats Bad Faith Claim in Worker’s Compensation

Posted on July 6, 2015, Authored by Russell W. Wilson, Filed under Employment

This scenario in worker’s compensation is familiar.  A worker has a pre-existing, degenerating, and progressively deteriorating condition, in this case an old injury to his knee.  Later, there’s an accident at work, shortly after which, knee surgery is required.  The treating physician believes the work-injury necessitated the surgery and permanent partial disability.  The independent medical examiner, however, opines the work injury caused only a sprain, a temporary injury that did not necessitate surgery or its attendant permanent partial disability.  Acting in accordance with the IME examiner’s opinion, the worker’s compensation carrier pays temporary total disability benefits from the date of the injury until the IME report was received.  The case goes to hearing, and the administrative law judge (“ALJ”) and the Labor and Industry Review Commission (“LIRC”) choose to adopt the opinion of the treating physician and award the cost for the surgery, temporary total disability through the post-surgical healing period, and permanent partial disability benefits.  A not uncommon course of events. The employee now claims, however, the carrier acted in bad faith by having terminated on-going indemnity and medical benefits and forcing the case to hearing.  The employee’s argument is that where the employee undergoes treatment in good faith for a work-related injury, the employer and carrier are liable for the consequence of treatment even if it is later determined the treatment was not necessary.  That argument is premised on the holding from Spencer v. DILHR, a Wisconsin Supreme Court case decided in 1972.  The ALJ adopts the employee’s argument and awards $30,000, the maximum penalty for bad faith under Wis. Stat. § 102.18(1)(bp).  The LIRC, however, reverses the ALJ’s award, noting the carrier’s IME report was “fairly debatable.”  While the IME report was not believed, it could have been believed. This was the situation presented to the Wisconsin Court of Appeals in Coe v. Labor and Industry Review Commission, 2015 WL 3949147, an unpublished decision issued June 30, 2015. The court of appeals made two important points in denying the claim for bad faith.  First, it accorded great weight deference to LIRC’s legal conclusion that existing law does not support the employee’s argument.  Second, the court of appeals observed that the rule in Spencer applies only to cases in which there was an undisputed compensable injury.  Here, however, the IME report put into dispute whether the work-related injury had run its temporary course a few weeks later and whether the need for surgery was unrelated to the work injury.  The court of appeals thus held that the carrier had a reasonable basis on which to deny benefits and force the case to hearing.  While an unpublished decision cannot be cited in court as precedent, the Coe case is nonetheless reassuring because it puts the court of appeals’ approval on common claims handling practice.

Court of Appeals Applies “Common Sense” to NLRB Decisions

Posted on July 29, 2015, Authored by Dean R. Dietrich, Filed under Employment

Two recent decisions by the DC Circuit Court of Appeals (DC Circuit) have overturned National Labor Relations Board (NLRB) decisions and applied “common sense” in reviewing decisions from the Board.  In both the decisions, the DC Circuit overturned a decision by the NLRB that found an employer to have committed unfair labor practices by the manner in which the employer prohibited conduct of employees deemed to be an exercise of Section 7 rights. In the first decision, the DC Circuit overturned a Board decision and held that AT&T Connecticut did not commit an unfair labor practice when it barred its employees from wearing white shirts with black letters that said “Inmate Number” on the front and “Prisoner of AT&T” on the back when these employees interacted with members of the public and customers.  The DC Circuit held that AT&T Connecticut did not commit an unfair labor practice when it banned employees from wearing these t-shirts when performing work for the company that involved interaction with customers and then disciplining those employees that refused to take off the shirts when performing work.  The NLRB felt that the messages on the shirts were protected speech but the DC Circuit found that the company had the right to exercise some control over the attire worn by these employees when interacting with members of the public and being in customer homes for repair work.  The DC Circuit felt that the messages on the t-shirts were inappropriate and the company had the right to prohibit “unprofessional clothing to be worn by employees” in those instances when interacting with customers. In a second decision, the DC Circuit Court of Appeals overturned a Board decision by holding that a casino resort did not commit an unfair labor practice by asking police to issue citations to union demonstrators at a union protest that included blocking the walkway in front of the casino.  The DC Circuit held that the casino’s communication with the police was considered protected speech and did not interfere with the protected speech of the union protesters.  The case has a long history of litigation between the Casino and the Culinary Workers and Bartenders Unions but in the end, the DC Circuit held that the actions taken by the Casino to ask for law enforcement to make arrests did not constitute an unfair labor practice or an improper restriction on the protected speech rights of the union members involved in the protest. These two decisions show that employers are often required to proceed to court in order to overturn decisions made by the NLRB.  Employers must be very careful because the NLRB has made a number of decisions that extend the union free speech rights of individuals.  Employers want to avoid a finding of a violation of union free speech rights in order to avoid a negative reputation.

Initial Certification of General Employee Elections Require 51% of All Eligible to Vote

Posted on July 22, 2015, Authored by Ruder Ware Attorneys, Filed under Local Governments and School Districts

With the Budget Bill from the 2015 Legislature now in effect, it should be noted a change was made in how election results are determined for newly represented general municipal employees.  2015 Wisconsin Act 55 (the Budget Bill) provides that in elections conducted after July 13, 2015, general municipal employee unions seeking initial certification to represent a collective bargaining unit must receive a positive vote from at least 51% of all of the general employees eligible to vote in a collective bargaining unit in order to be certified to represent the general employees. Prior to the Budget Bill, the 51% rule only applied to general municipal unions previously authorized to represent general employees as required in the annual certification process and to be recertified to represent the collective bargaining unit for an additional year.  See, Section 111.70(4)(d)3.b., Wis. Stat.  The 51% rule of all eligible to vote did not apply to those elections where general municipal employee unions were seeking initial certification.  This change closes the gap and makes the voting rule the same for initial certifications as for annual recertifications for general municipal employees.  Municipal employers should keep this in mind if presented with a situation of an initial certification of a general municipal union.