In a widely publicized move, the U.S. Department of Labor on March 7 proposed an update to the Fair Labor Standards Act (FLSA) regulations governing employees who are exempt from overtime.   The most significant change in the proposal is to raise the minimum salary an employee must earn to qualify as exempt from overtime.  The existing minimum salary is $455 per week; the new proposed minimum salary is $679 per week, a 49 percent increase.    An employee must also satisfy one of the “duties” tests to be exempt from overtime (e.g., executive, administrative, professional), but the proposed rule does not change any of those tests.

Most employers probably remember, with some chagrin, the DOL’s 2016 rule that more than doubled the salary basis to $913 per week.   Businesses were scrambling to adjust their job descriptions and payrolls in anticipation of the new rule’s  December 1, 2016 effective date.   Then, eight days before, on November 22, 2016, a district court in Texas issued a surprise nationwide injunction preventing it from going into effect.   For a refresher on the injunction and its aftermath, see our posts here, here, and here.

On August 21, 2017, the same federal judge, Amos Mazzant, issued a final ruling invalidating the $913 per week salary basis.   Surprising to some, the Department, now with a Trump appointed Secretary, appealed the judge’s final ruling to the U.S. Court of Appeals for the Fifth Circuit.   But, the Court of Appeals agreed to hold the appeal in abeyance while the DOL undertook further rulemaking to consider adjusting the salary basis to something lower than $913 per week in the 2016 Rule, but more than the $455 per week that was previously in effect (and remains in effect today).  Perhaps not coincidentally, the proposed $679 per week proposed salary basis is almost exactly in the middle of $455 and $913.

So, what happens next?   On the rulemaking side, the public will have 60 days to comment on the proposed rule.  The Department will then consider those comments, and issue a final rule, probably sometime in 2020.   More importantly though, what will happen if, as is likely, the DOL’s final rule maintains the $679 per week salary basis?    If challenged, is a court more likely to find a 49 percent increase is valid because it is less of an increase than in the 2016 rule?   Does the validity of the DOL’s rule depend upon something so arbitrary as a federal judge’s opinion about what persons in certain occupations should earn?

Many employers and business advocacy groups agree $455 is probably too low a salary basis given inflation that has occurred since it was established. They can probably also live with the proposed $679 per week (indeed, this salary level was chosen after considerable input from interested parties).   But, despite the DOL’s effort to appease all interested stakeholders, there is a good chance some interest group will file suit to challenge the new rule.   The issue is not so much the amount of the salary threshold, but whether the DOL has the right in the first place to use a minimum salary as part of the test to determine whether an employee is exempt from overtime.    Commenting on Judge Mazzant’s ruling on the Obama era rule, I said in a September 12, 2017 post:

In the ruling on the preliminary injunction, Judge Mazzant questioned whether the DOL has the legal authority to establish a salary basis test.   He reasoned the FLSA itself defines Executive, Administrative, and Professional exemptions only with respect to duties, and says nothing about the employee’s salary.  Therefore, he ruled, Congress did not intend that the amount of an employee’s salary be a factor in determining whether the employee was exempt; only the duties are relevant.   By including a salary basis test in addition to a duties test, Judge Mazzant concluded, at least preliminarily, that the DOL likely exceeded its statutory authority.

It is important to note that, in the final ruling, Judge Mazzant backed away from his initial opinion that questioned the DOL’s authority to use the salary test at all. Instead, he concluded merely that $913 per week too high because it likely would have the effect in many cases of eclipsing the duties test, essentially rendering the duties irrelevant.   In other words, the salary was so high that many employees who satisfied the duties test for one of the executive, administrative, or professional exemptions would still be classified as non-exempt because their salary was less than $913 per week.

In addition to questioning the legal basis for the minimum salary, there are practical reasons the salary basis test should be abandoned.   First, the salary basis applies to the entire country, and does not take into account regional and local economic conditions.   A $679 per week salary means something different in Des Moines than it does in San Francisco or New York.    Second, in the modern era the salary basis has become a political weapon used to benefit favored constituencies, depending upon the party in power.   Third, the proposed rule contains a provision that allows the Department to change the salary basis every three years.   But, the rulemaking process is so slow that it takes at least two years for a rule to get from the proposal to the final stage.  Moreover, once the new salary basis is in place, it could once again be subject to legal challenge.    Lawyers and lobbyists love this process, but whether it actually benefits ordinary employees is questionable.  Finally, lawyer and blogger Jon Hyman makes an excellent point that I have not seen elsewhere, but is important:  that is, the salary basis test simply does not matter.   If an employer pays someone less than $679 per week, that person is probably not the sort of employee who exercises the type of discretion and judgment required to satisfy the duties part of the test.  It is the duties test that employers should really be worried about.

So what’s the takeaway from all this?  Employers, get ready for the new salary basis in 2020, but don’t be surprised if it never goes into effect.

 

Iowa law has fairly strict limits on an employer’s right to conduct drug and alcohol testing.  One area in which testing is allowed, however, is when there is a workplace accident.  An employer may require an employee to undergo post-accident drug or alcohol testing if the employee is injured and requires medical treatment, or if there is property damage over $1,000.

Many Iowa employers have concluded mandatory post-accident drug and alcohol testing improves workplace safety.  It may deter employees from using illegal drugs or alcohol in the first place if they know an accident will be followed by a mandatory drug screen.   Employers have to give notice to their employees of this practice, so it should not be a surprise to employees.  A positive drug test also allows an employer in many circumstances to impose discipline or terminate an employee who presents a safety risk because of drug or alcohol use.   Lastly, if a drug or alcohol test reveals the employee was intoxicated, it provides a defense to the payment of workers’ compensation benefits if the intoxication was a substantial factor causing the injury.1999_219_safety-zone

But, Iowa employers that use mandatory post-accident drug testing should take note of November 1, 2016.    That is the date a new OSHA rule concerning post-accident drug testing takes effect.   Contrary to the rationale underlying Iowa’s drug testing law, OSHA contends such testing actually makes the workplace less safe because it deters employees from reporting workplace injuries or illnesses.   While the new rule does not contain a blanket prohibition against post-accident testing, an employer who uses drug testing or the threat of testing as a form of retaliation is subject to an OSHA citation and fine.   Adding insult to injury, OSHA has increased its fines by 78%.   The fine for a first serious citation will be in the range of $7,000-$12,740.   Deliberate or willful violations could result in fines up to $70,000-127,400.

So, how does OSHA decide if your mandatory drug testing procedure has a retaliatory motive?

Testing required by state or federal law or regulation is safe (such as the federal motor carrier safety rules).  OSHA has declared in advance that such programs are not implemented with retaliation in mind.

On the other hand, mandatory testing for every accident that causes serious injury or property damage is not safe from scrutiny for retaliatory motive.   The agency is likely to approve of post-accident drug testing only if it is done in specific, narrow circumstances.  For example, the Agency comments to the final rule state such testing should be limited “to situations in which employee drug use is likely to have contributed to the incident, and for which the drug test can accurately identify impairment caused by drug use.”

What are the practical implications of this new rule?  For one, to avoid conflicts with OSHA, employers should no longer rely on blanket policies allowing post-accident testing.  Each and every decision to test will have to be justified based upon the facts of the particular accident.  As a practical matter, only if an employer has reasonable suspicion of impairment based upon the employee’s behavior or the circumstances of the accident should testing be used.  Unfortunately, it is very difficult for employers to make such judgments, particularly under the threat of an OSHA citation and fine if you are wrong.

It is also important to remember that a positive drug test, in and of itself, is not necessarily evidence the employee was impaired.   Taking adverse action based upon a positive screen, absent other evidence of impairment, exposes the employer to a higher risk of citations and fines.

The new OSHA rules are one more example of a federal agency imposing its view on states that have already developed balanced approaches for dealing with workplace safety.   It is hard to conceive how restricting post-accident drug testing will improve workplaces for Iowa employe