Hunton Employment & Labor Perspectives

On Tuesday, April 23, 2024, the U.S. Department of Labor (“DOL”) published the final version of a rule originally proposed in September 2023, raising the salary threshold for the Fair Labor Standards Act’s (“FLSA”) exemption for executive, administrative, professional, and computer employees and the total annual compensation level for the highly compensated employee exemption. The final rule also provides for periodic, automatic increases going forward. So, what should employers know about the final rule, and how can they stay compliant with this shifting landscape?

As pay equity has drawn more attention in recent years, employers need to stay abreast of the patchwork of federal, state, and local laws related to pay equity issues. Importantly, employers should understand the varying standards for protected characteristics, appropriate comparators, and accepted defenses under the varying laws of different jurisdictions. At a high level, this post summarizes the federal and state legal frameworks for pay equity claims and highlights the important differences in analyzing such claims.

Webinar: Don’t Get Lost In the Dark – Navigating Pay Transparency and Pay Equity Laws

Tuesday, March 21, 2023
11:00 am–12:00 pm ET
10:00 am–11:00 am CT
8:00 am–9:00 am PT

Now perhaps more than ever, employers of all stripes are grappling with an increased focus on pay equity, and it is transforming employer approaches to compensation. Not only are employers dealing with a ramped-up focus on pay equity and technical compensation compliance by several agencies, in just the past few years states and localities from sea to shining sea have enacted new laws impacting various aspects of employers’ compensation and job posting practices. This presentation provides an overview of the pay equity landscape as well as discusses other pay transparency and reporting requirements across the nation.

On December 21, 2022, New York Governor Kathy Hochul signed New York State’s pay transparency bill into law.  Effective September 17, 2023, the new law will require employers to disclose the anticipated compensation range for any advertised job posting.  See N.Y. Lab. Law § 194-b.

A small but growing number of employees are asking for cryptocurrency as a form of compensation.  Whether a substitute for wages or as part of an incentive package, offering cryptocurrency as compensation has become a way for some companies to differentiate themselves from others.  In a competitive labor market, this desire to provide innovative forms of compensation is understandable.  But any company thinking about cryptocurrency needs to be aware of the risks involved, including regulatory uncertainties and market volatility.

The Department of Labor issued two opinion letters on Tuesday in response to specific inquiries that may nonetheless provide some clarity for employers in general.

The first letter was in response to an inquiry from an employer that offers its employees a non-discretionary lump sum bonus of $3,000 (in addition to their regular hourly rate) for completing a 10-week training program.  During the training program, the employees may work more than 40 hours in a given week and the employer requested an opinion from the DOL on the proper method for calculating overtime pay.  In response, the DOL stated that the $3,000 bonus must be included in the regular rate of pay (for purposes of calculating overtime) “as it is an inducement for employees to complete the ten-week training period.”  The DOL then explained that the bonus should be divided into ten $300 increments to be added to the employees’ pay for each week of the training program for purpose of making the overtime calculation.

The Department of Justice’s top antitrust official announced that criminal charges against companies who agreed not to hire one another’s employees will be forthcoming, with announcements to be made in the coming months.

This past week the FTC and DOJ issued an 11-page guidance document aimed at protecting employees against anticompetitive conduct with respect to naked wage-fixing and agreements, in which companies agree on salary or other terms of compensation, and anti-poaching agreements. The guidance to human resource (“HR”) professionals and hiring managers relates to both hiring and compensation decisions.

The government’s guidance makes clear that naked wage-fixing agreements and anti-poaching agreements, in which companies agree not to recruit each other’s employees, are illegal under U.S. antitrust laws and, moving forward, DOJ will criminally investigate both individuals and companies suspected of their violation.  There is a carve-out for legitimate collaboration between employers.  The most common form of relevant, legitimate collaboration would be a joint venture between two companies, as these are not considered per se illegal under the antitrust laws.

Roland Juarez will present a webinar on “Defending California Wage and Hour Litigation Amid New Legislation and Court Decisions” on Wednesday, October 28, 2015.

Details and Registration

Robert Flowers and Alan Marcuis will present a webinar on “Compensation & Contracts” to the Independent Community Bankers of America on Wednesday, October 14, 2015.

Robert Flowers and Alan Marcuis will present a webinar on “Compensation & Contracts” to the Independent Community Bankers of America on Wednesday, October 14, 2015.

In response to a presidential memorandum directing the Department of Labor (“DOL”) to collect summary compensation data from federal contractors and subcontractors to combat pay discrimination, the DOL’s Office of Federal Contract Compliance Programs (“OFCCP”) recently proposed a rule calling on certain federal contractors to submit reports on employee compensation.  The rule, published in the Federal Register on August 8, requires covered contractors to annually submit an “Equal Pay Report.” Covered federal contractors and subcontractors are those who:

• File EEO-1 reports;
• Have more than 100 employees; and
• Hold federal contracts or subcontracts worth $50,000 or more for at least 30 days.

On April 8, 2014, in recognition of National Equal Pay Day, President Obama continued to advance his wage equality agenda by focusing on wage transparency through Executive Order on Non-Retaliation for Disclosure of Compensation Information (“Executive Order”) and a Presidential Memorandum entitled "Advancing Pay Equality Through Compensation Data Collection" (“Presidential Memorandum”).

President Obama is not only focused on health care these days.  He is also focused on helping companies keep employees, rather than lay them off, during a tough economic time.  The federal government will actually supplement wages, in certain circumstances, to stop layoffs. In February of 2012, President Barack Obama signed into law the Middle Class Tax Relief and Job Creation Act of 2012.  The chief focus of the Act was extending tax cuts for the middle class.  However, the Act also made substantial revisions to the unemployment insurance system.  One of the key revisions was to provide substantial federal funding for the expansion of state short-time compensation (“STC”) programs, which are sometimes referred to as “work sharing” programs.

Effective February 28, 2013, the Office of Federal Contract Compliance Programs (“OFCCP” or “Office”) has rescinded two guidance documents implemented during the Bush administration that outlined methods for investigating and evaluating pay discrimination claims against federal contractors and replaced them with new guidelines emphasizing a case-by-case approach that provides investigators with authority to conduct more thorough investigations and identify a broader range of compensation-related discrimination.  The first document, Interpreting Nondiscrimination Requirements of Executive Order 11246 With Respect to Systemic Compensation Discrimination (“Compensation Standards”), set forth the procedures OFCCP followed when issuing a notice of violation for pay discrimination; and the second document, Voluntary Guidelines for Self-Evaluation of Compensation Practices for Compliance with Nondiscrimination Requirements of Executive Order 11246 (“Voluntary Guidelines”), contained directions that federal contractors themselves could follow to preemptively show compliance with their obligation to evaluate their internal pay practices for fairness.

Federal contractors have numerous non-discrimination and affirmative action obligations under Executive Order 11246, the Vietnam Era Veterans' Readjustment Assistance Act ("VEVRAA") and the Rehabilitation Act, including the preparation of annual written affirmative action plans. These obligations are enforced by the Department of Labor's Office of Federal Contract Compliance Programs ("OFCCP"), which is currently headed by Patricia A. Shiu.  Since Shiu was appointed director in August of 2009, the OFCCP has been extremely active, increasing contractors' affirmative ...

The Texas Supreme Court officially closed the door on the ability of workers’ compensation claimants to seek supplemental relief under the Texas Insurance Code.  In Texas Mutual Ins. Co. v. Ruttiger, --- S.W.3d ---, No. 08-751 (Tex. Aug. 26, 2011), the Court held that the Texas Workers’ Compensation Act (“Act”) preempts claims against workers’ compensation insurers for unfair or “bad faith” settlement practices under the Texas Insurance Code. 

Unemployment compensation is a federal-state program that provides benefits to eligible workers who become unemployed through no fault of their own. Under the system, the IRS collects from employers an annual payroll tax pursuant to the Federal Unemployment Tax Act (FUTA). The states also collect a payroll tax on a quarterly basis, which they use to pay benefits. The states are permitted to determine their own benefit eligibility requirements, the amount and duration of benefits and set the tax structure for employers so long as their standards do not conflict with federal law.

On December 13, 2010, New York passed the Wage Theft Prevention Act (“WTPA”).  The WTPA, which amends the state’s labor law regarding wage payments, and becomes effective on April 12, 2011.  It  heightens the requirements of employers as relating to notice and the payment of wages while also stiffening the penalties for notice and payment failures.

Notice Requirements:

The law currently in effect requires employers to inform new hires in writing of their designated pay date, rate of pay, and overtime rate, if applicable.  The WTPA revises this portion of the law, placing further obligations on employers by requiring this notice to be issued not only upon hire but also by February 1 of every subsequent year.  The WTPA also expands the information to be provided to include: the employee’s rate of pay and how it is paid (hourly, weekly, commission, etc.); allowances claimed against minimum wage (e.g., tip, meal or lodging credits); the employer’s regular pay day; the employer’s name and any “doing business as” names; the address of the employer’s main office or principal place of business and mailing address if different; the employer’s telephone number, plus any other information the Commissioner of Labor deems “material and necessary.”  The notice must be provided in English, or in the employee’s primary language if his/her primary language is not English, and must be signed and acknowledged by the employee each time it is received.

In yet another employee misclassification case, Kentucky Attorney General, Jack Conway, brought suit against FedEx Corp. alleging that FedEx violates Kentucky state law by misclassifying its drivers as independent contractors.  The Complaint contends that FedEx violated state law in regards to unemployment insurance, workers compensation, payroll taxes, and the Kentucky Consumer Protection Act.  The lawsuit asks the Court to order FedEx to classify its drivers as employees and to pay the contributions and penalties required by state law, which includes back pay dating to 2000 and totaling at least $10 million.

Though the primary focus of the Dodd-Frank Wall Street Reform and Consumer Protection Act (“Dodd-Frank”) is the reduction of systemic risk in financial markets and increased regulation of large financial institutions, Dodd-Frank also contains executive compensation, corporate governance and enforcement provisions applicable to most public companies.  Some of these provisions are highlighted below.  For more insights on the full range of business and legal issues associated with current market and regulatory changes, including the Dodd-Frank Act’s executive compensation, corporate governance and enforcement provisions, please visit Hunton & Williams LLP's Financial Industry Resource Center.

A recent decision from the California Supreme Court has provided a rare victory for companies with employees in that state.  In Schachter v. Citigroup, Inc., the Court ruled that a forfeiture provision in an employee incentive compensation plan did not violate California wage laws.