Breaking News: DOL’s Final Rule Increasing Salary Threshold for White Collar Exempt Employees Enjoined and Will Not Take Effect on December 1

Just as commentators, political pundits and Vegas odds makers were surprised by the recent Presidential election results, the legal world was surprised late yesterday by Federal Court Judge Amos L. Mazzant’s decision blocking the Department of Labor’s Final Rule related to the salary test for white collar exempt employees from taking effect, as planned, on December 1st (the “Final Rule”).  As we previously reported in our November 18th “Off the Clock” blog post, twenty-one states, as well as the U.S. Chamber of Commerce and other business groups, had filed an emergency action in federal court seeking to enjoin the Final Rule.

In his decision, Judge Mazzant ruled that the Department of Labor exceeded its authority and ignored Congressional intent when it published its Final Rule raising the minimum salary level from $23,660 annually to $47,476 annually.  In addition, the Court ruled that the Department of Labor lacked authority to impose the automatic salary increase provision found in the Final Rule, which would first take effect in January 2020.  The practical import of the Judge’s decision is that the Final Rule is currently frozen and, therefore, will not be enforced by the Department of Labor.  Thus, the current salary threshold of $455 per week or $23,660 annually remains in effect for white collar exempt employees under the Fair Labor Standards Act (“FLSA”).

Procedurally, issuance of an injunction does not end the case that was filed by the states and business groups.  The Department of Labor could continue to pursue the case to seek a final ruling.  The likelihood of the Department of Labor, however, securing a reversal of the decision in the Federal District Court that preliminarily enjoins the Final Rule, before appellate review, is virtually non-existent.

Notably, although the action was filed by only 21 of the 50 states, the Judge’s injunction shall have nationwide effect and applies to both private and public-sector employers alike.

As has already been widely reported in the press, certain major employers within the United States had already implemented salary increases in anticipation of the December 1st effective date.  Those employers are now faced with the business decision as to whether to honor those increases or roll back the salary increases in light of the change in the law.  Any such roll back would clearly negatively impact employee morale.

To be sure, Judge Mazzant’s decision will not be the last chapter written with respect to whether the salary threshold should be increased for white collar exempt employees under the FLSA.  The Court’s decision makes clear that such an increase is the province of Congress, however.  As such, there will almost certainly be legislation filed in the coming months aimed at accomplishing what the Final Rule had intended to accomplish.  In addition, once President-elect Trump assumes office, his administration’s priorities will shape future rulemaking efforts within the Department of Labor.  For now, however, employers can be certain that the current salary threshold for white collar exemption remains unchanged, and no action is required to attempt to comply with the now-enjoined Final Rule.

We will continue to monitor developments under the Fair Labor Standards Act and will provide timely updates.  If you have any questions concerning this issue or any other employment-related matter, please contact one of our Labor, Employment and Employee Benefits attorneys.

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USCIS Issues Updated Form I-9

On November 14, 2016, the United States Citizenship and Immigration Services (USCIS) issued a revised version of the Form I-9 (Employment Eligibility Verification).

Employers must begin using the updated Form I-9, which is dated “11/14/2016,” by January 22, 2017.  In the interim, employers may continue to use either the prior version dated “03/08/2013” or the newly released version.

The updated Form I-9 features a number of changes, including but not limited to:

  • Adding online prompts in each of the various fields to assist with completion of the Form;
  • Asking for “other last names used” in Section 1 instead of “other names used;”
  • A streamlined certification for certain foreign nationals; and
  • A new area in Section 2 for including “additional information” so employers do not have to cram such information in the margins.

Although the Form I-9 has been significantly updated to be more intuitive and user friendly, particularly when completed electronically through Adobe Reader, it bears noting that the Form I-9 must still be printed, signed and dated by both the employee and the employer representative in a timely manner and retained by the employer. 

In revising the Form I-9, USCIS also did away with the various instructions, which had previously been included in the form. The instructions are now maintained separately from the Form I-9 (like other USCIS forms). Although separate from the Form I-9, employers must ensure that all pages of the instructions and Lists of Acceptable Documents are available to all employees who complete the form, either in hard copy or electronically.

You can access the updated Form I-9 here. The Instructions for the Form I-9 may be accessed here.

If you have any questions about the updated Form I-9, please feel free to contact a member of our Labor, Employment, and Employee Benefits Group.

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MBA’s 14th Annual In-House Counsel Conference, “What Keeps Counsel Up At Night”

On Thursday, December 1, Bob Kilroy will be speaking as part of a panel the Massachusetts Bar Association’s 14th Annual In-House Counsel Conference, entitled “What Keeps Counsel Up At Night.”   The program will provide information on topics and trends of significant concern to in-house practitioners, including:  the newly enacted Pay Equity Act and steps that can be taken now to mitigate the risk and liability associated with pay equity claims, transgender rights in the workplace, including complaints raised by co-workers related to choice of restroom facilities, the Department of Labor’s Final Rule related to white collar exemptions under the FLSA, and what employers need to know in light of the ballot initiative for recreational marijuana use.

 If you like to attend, please sign up here.  We hope to see you there!


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Department of Labor’s Overtime Rule Scheduled to Take Effect on December 1, 2016 Remains Subject to Challenge in Federal Court

As employers throughout the nation prepare for the Department of Labor’s Overtime Rule to take effect on December 1st, a legal challenge by the U.S. Chamber of Commerce and other business groups, as well as 21 states, continues to wind its way through a Federal District Court in Texas.  Yesterday, Judge Mazzant of the Eastern District of Texas adjourned a motion hearing without ruling on the business groups’ motion to enjoin the new rule, but, in so doing, the Judge stated that he expected to issue his ruling on November 22d.  If Judge Mazzant issues the requested injunction in such a manner as to have nationwide effect, then the Overtime Rule that increases the salary threshold for white collar exemptions to $47,476 annually will not go into effect on December 1st.  Thus, the current salary threshold of $23,660 would remain in effect.  If, instead, the motion is denied, another hearing is expected to occur on November 28th in response to the plaintiffs’ motion for summary judgment – again seeking to strike down the Overtime Rule.  Judge Mazzant’s aggressive questioning of both sides during the November 16th motion hearing has not provided any real clue as to how he is apt to rule.

 We will continue to monitor developments on this issue and provide updates following substantive rulings by the Judge.  In the meantime, it is wise to continue to prepare as if the Overtime Rule will, in fact, go into effect on December 1st as planned.


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What Massachusetts Employers Should Know About Recreational Marijuana

On November 8, 2016, Massachusetts voters approved a ballot question legalizing marijuana for recreational and commercial use. The Regulation and Taxation of Marijuana Act (the “Act”) provides that – as of December 15, 2016 – persons at least 21 years of age may possess, use, purchase, process, and/or manufacture 1 ounce or less of marijuana outside their residence and up to 10 ounces of marijuana within their residence.

As relevant to employers, the Act provides that property owners may prohibit or otherwise regulate the consumption, display, production, processing, manufacturing or sale of marijuana and marijuana accessories on or in their property.  Importantly, the Act further provides that it does not require employers to permit or otherwise accommodate conduct allowed by the Act in the workplace and does not affect the authority of employers to enact and enforce workplace policies restricting the consumption of marijuana by employees.

Employers should act fast to ensure that their drug use, drug testing, and any related policies are updated in light of the new law and clearly reflect the organization’s position and expectations of its employees.

Employers subject to certain government and customer requirements with safety, health, and liability concerns are free to adopt zero-tolerance policies. Such policies should be clearly articulated to explicitly include marijuana.  Otherwise, the term “illegal drug” could cause confusion – since marijuana is illegal under federal law but legal under state law.

With respect to testing, the legal risk of testing applicants for employment is low because the applicant may avoid any potential invasion of privacy simply by choosing to withdraw from the application process.  Under the current law, employers are free to withdraw offers to applicants who test positive for marijuana, if the application and job advertisements provide notice.

Once an employee is hired, employers should only test employees in safety sensitive positions for marijuana, and only on a random basis or when they have reasonable suspicion that the employee is under the influence.  Employers are cautioned to not test employees in non-safety sensitive positions, as such tests could invite invasion of privacy claims.  Employers are free, however, to impose discipline based on observation of workplace impairment for employees occupying non-safety sensitive positions.  Unionized employers must also ensure compliance with applicable provisions set forth in collective bargaining agreements related to drug testing, as well as compliance with the need to establish just cause when imposing discipline.

If you need guidance in crafting a policy that fits your workplace, or would like your drug use and off-duty conduct policies reviewed, we would be happy to assist you.


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Massachusetts Employers Required to Provide Paid Leave on Veterans Day

In July 2016, Chapter 149 of the Massachusetts General Laws was amended to require Massachusetts employers with 50 or more employees to provide paid leave on Veterans Day for any veteran desiring to participate in a Veterans Day exercise, parade, or service in his or her community of residence.  The leave must be of “sufficient time” to permit the veteran to participate in such services.

For Massachusetts employers with less than 50 employees, the law remains the same – veterans are entitled leave on Veterans Day to participate in an exercise, parade, or service in his her community of residence, but the leave may be paid or unpaid, as determined by the employer.

In light of this amendment, employers with 50 or more employees should review and update, as necessary, their Handbooks and/or leave policies to ensure compliance.

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Reminder: Employees Are Legally Entitled to Time Off From Work to Vote

Massachusetts law requires employers in any manufacturing, mechanical or mercantile establishments to give employees, upon request, up to two hours after the polls open to vote.  Technically, employers need only give employees leave during the first two hours of the day when the polls are open, i.e., between 7:00 and 9:00 a.m., but employers are wise to be more lenient, particularly with the availability of early voting.

Employers that are required to provide employees with time off to vote do not have to pay employees for the time, although many allow employees to use paid personal time.

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