Construction P&C Pro-File Newsletter – February 2017

New OSHA Beryllium Standards

On Jan. 9, 2017, the Occupational Safety and Health Administration (OSHA) issued a final rule to amend its beryllium standards for the construction, shipyard and general industries.

The final rule will reduce the eight-hour, permissible beryllium exposure limit from 2.0 micrograms per cubic meter to 0.2 micrograms per cubic meter. It also establishes a short-term exposure limit of 2.0 micrograms per cubic meter over a 15-minute sampling period.

The rule will require additional protections that include personal protective equipment, medical exams, medical surveillance, and training.

The final rule becomes effective on March 21, 2017. Affected employers must provide newly required showers and changing rooms within two years after the effective date and implement new engineering controls within three years after the effective date.

OSHA estimates that the new rule will prevent 46 new cases of beryllium-related disease and save the lives of 94 workers annually.

Employers should become familiar with the new standards and evaluate their current workplace practices to ensure compliance with the final rule.

DOL Sues Contractor for Firing Safety Manager

According to a lawsuit filed on Dec. 28, 2016, a Tampa roofing contractor discriminated against its safety manager after he cooperated with an OSHA investigation. The Department of Labor (DOL) lawsuit was a result of an investigation by OSHA’s Whistleblower Protection Program.

Under the program, employers are prohibited from retaliating against employees who raise protected concerns or provide protected information to the employer or government. The lawsuit seeks back wages, interest, and injunctive relief as well as compensatory and punitive damages.

Construction Workers at Highest Risk for WMSDs

According to a recent Occupational and Environmental Medicine report, U.S. construction workers are at a higher risk of work-related musculoskeletal disorders (WMSDs) than all other industries combined. The back is the primary body part affected, with overexertion named as the major cause of WMSDs.

Employers should adopt ergonomic solutions at construction sites, such as training employees on safe lifting practices, in order to reduce the number of WMSDs and prevent lost wages.

Jonathan Belek
Risk Management Consultant
jbelek@srfm.com

Jon Belek

Are you ready to comply with the new DOL Overtime Payment Rules?

On May 18, 2016, the U.S. Department of Labor (DOL) announced a final rule regarding overtime wage payment qualifications for the “white collar exemptions” under the Fair Labor Standards Act (FLSA).

How does this rule affect your business? The final rule increases the salary an employee must be paid in order to qualify for a white collar exemption. The required salary level is increased to $47,476 per year and will be automatically updated every three years. The final rule does not modify the duties test employees must meet to qualify for a white collar exemption.

Employers will need to comply with this rule by Dec. 1, 2016.

Overtime Rule Change

How can you prepare yourself to comply with the new rule? Follow these steps:

  • Become familiar with the new rule and identify which employees will be affected. Employers should reclassify employees as exempt or non-exempt, as necessary, by Dec. 1, 2016.
  • Consider communicating any work schedule changes to affected employees before the date mentioned above.
  • Evaluate whether implementing new timekeeping practices and training for managers and supervisors on the new requirements is necessary.

The White Collar Exemption

The white collar exemptions are minimum wage and overtime pay exemptions available to certain administrative, professional, outside sales, computer and highly compensated employees.

To qualify for the white collar exemption, an employee must meet a salary basis test, a salary level test and a duties test – the employee must meet all three tests in order to be exempt from FLSA minimum wage or overtime pay requirements.

The three tests are outlined below:

  • The salary basis test is used to make sure the employee is paid a predetermined and fixed salary that is not subject to reduction due to variations in the quality or quantity of work.
  • The salary level test is used to ensure that the employee meets a minimum specified amount to qualify for the exemption. This salary threshold provides employers with an objective and efficient way to determine whether an employee qualifies for a white collar exemption.
  • The duties test requires that the employee’s job duties conform to executive, administrative or professional duties, as defined by law. This analysis requires a more thorough evaluation of whether an employee can be classified in one of these categories: administrative, professional, outside sales, computer and highly compensated employee.

Higher Salary Threshold Requirement

The final rule increases the minimum salary level of $455 per week ($23,660 per year) to $913 per week or $47,476 per year. The new salary level represents the 40th percentile of wages earned by workers in the lowest-wage census region in the United States (currently the South) for a full-year worker.

The final rule also increases the $100,000 salary level for highly compensated individuals to $134,004 per year—the 90th percentile of wages earned by full-time workers across the entire United States.

These higher salary levels will be updated every three years to maintain the salary level at their corresponding 40th or 90th percentiles. The first automatic rate update is expected by Jan. 1, 2020. The DOL will publish updated rates in the Federal Register and on the Wage and Hour Division’s website at least 150 days before their effective date.

Calculating Employee Wages

Administrative, Executive and Professional Employees

The final rule will allow, for the first time, non-discretionary bonuses and incentive payments (including commissions) to be used to satisfy up to 10 percent of an employee’s standard salary level. This may include the payment of non-discretionary incentive bonuses tied to productivity and profitability. Non-discretionary bonuses and incentive payments may be used if they are paid on a quarterly basis, but more frequent payments are acceptable. However, the DOL will allow employers to make some “catch-up payments.”

The DOL will also allow employers to use significantly large bonuses toward 10 percent of the required salary amount.

Highly Compensated Employees

Under the final rule, highly compensated employees qualify for an overtime exception if they meet the new salary level of $134,004 per year. However these individuals must receive at least the full standard salary amount each pay period (i.e., $913 per week, $1,826 bi-weekly or $3,956.33 per month) on a salary or fee basis (not counting non-discretionary bonuses and incentive payments).

The remainder of a highly compensated employee’s wages may be calculated by including the full amount of non-discretionary bonuses and incentive payments (including commissions).

Impact on Employers

Given the significant increase in the salary level requirement, employers will need to increase employee salaries, or re-classify certain employees as either exempt or non-exempt, solely based on their salary level. The DOL estimates that this final rule extends overtime protections to approximately 4.2 million workers who are currently exempt under the white collar rules and clarifies overtime compensation eligibility for another 5.7 million white collar workers and 3.2 million salaried blue collar workers whose entitlement to overtime pay will no longer rely on the application of the duties test.

In addition, because of the short implementation deadline, employers should not delay becoming familiar with the new requirements and implementing any necessary changes into their timekeeping and payroll systems. Employers should also determine whether additional training on modifications is necessary for their managers and supervisors.

Finally, employers should also consider communicating with employees to inform them of how their wages, hours of work and timekeeping practices will be affected.

Enforcement and Compliance

Employers that fail to comply with the final rule may be subject to a variety of overtime wage payment enforcement mechanisms, including the ones listed below.

  • Private employee lawsuits: These lawsuits can be initiated by employees either individually or through collective action to recover back pay, interest, attorneys’ fees and court costs.
  • Administrative injunctions: These injunctions may include a prohibition on the shipment of goods in interstate commerce if the goods were produced in violation of the FLSA (including overtime wage payment provisions).
  • Civil fines for willful and repeated violations (up to $1,100 per violation).
  • Criminal charges for willful violations (up to $10,000 in fines, imprisonment for up to six months or both).

These laws can seem confusing and complex. If you have questions or need more information, please contact Sinclair Risk & Financial Management – we’re here to help!

Shannon Hudspeth
Human Resource Director
Overtime Rule Changes

FLSA Overtime Rule Change

FLSA Overtime Rule Change On March 14th, the new Final Regulations on the Fair Labor Standards Act were sent to the Office of Management and Budget for final review.  The proposed U.S. Department of Labor (DOL) changes to the “white-collar exemption” in the Fair Labor Standards Act (FLSA) could make more than 5 million individuals eligible for overtime pay—individuals who currently aren’t eligible. This could have a significant impact on employers who may face increased labor costs and compliance efforts.

To qualify for the white-collar exemption, an employee must satisfy a variety of tests, including a duties test, a salary basis test and a salary level test. Currently, under the salary level test, only white-collar workers making less than $23,660 a year are automatically eligible for overtime pay. Under the proposed rule, the salary threshold would increase to a projected $50,440 per year in 2016 and would be updated automatically each year in order to keep up with rising costs.

On Feb. 9, 2016, 108 bipartisan members of Congress signed a congressional support letter, addressed to DOL Secretary Tom Perez, expressing concerns about the proposed rule. Lawmakers are concerned about the unintended consequences for both employers and employees.

One of these concerns is the unclear explanation of the duties test, which is one of the main components used in determining whether employees are exempt from the FLSA provisions. In the proposed rule, the language is posed in question format instead of in a concrete way that employers can easily understand.

Another concern mentioned in the letter is that increasing the salary threshold by such a significant amount—113 percent—disregards the geographic diversity of the country. It states that since the purchasing power of a dollar is different in various parts of the United States, the DOL is ignoring the differences that exist between rural and urban areas.

If the rule is passed as drafted, its most negative impact could be on individuals entering the workforce and mid-level managers. Many small businesses cannot afford to increase their employees’ salaries and would be forced to take actions that could include reducing employees’ hours or shifting salaried employees to hourly status. This could mean a reduction in benefits and could be perceived by salaried employees as a demotion.

In addition, employers would need to re-examine employees’ exemption statuses, review and revise overtime policies, notify employees of changes and adjust payroll systems. Employers may also incur additional managerial costs because they might need to spend more time tracking when employees clock in and out.

The DOL, on the other hand, projects that the higher salary level requirements could actually simplify the process of employee classification because employers would not be required to perform a duties test for employees making less than $50,440 per year, which, in turn, could result in fewer lawsuits and lower legal costs for employers.

The DOL invited the general public to comment on the new rule from June 3 to Sept. 4, 2015, during which it received more than 200,000 comments. The comment period is now closed and a final rule is expected in the summer of 2016. The time between the date the final rule is announced and the date it goes into effect could be short—giving employers little time to make changes.

The Final Regulations could be released as early as May or June, but likely no later than July 7th, with an effective date likely on or before Labor Day, September 5th.  Employers should consider the impact these regulations will have on their current workforce classifications in advance of the effective date.

Matt Bauer
President
mbauer@srfm.com

FLSA Overtime Rule Change