Employers do some crazy things, sometimes. One employer in New Braunfels has been paying “volunteers” with gift cards and fabric. Quilt Haus and Way to Sew have been paying some workers with gift cards payable to the store itself. The workers would receive one gift card valued at $8 for each hour of work. The worker could then use the card to buy fabric. The store referred to the workers as “volunteers.” But, as I understand the Fair Labor Standards act, there is no such thing as a volunteer worker. If the employer accepts your work, then the employer must pay for it.

Apparently, some of the workers complained. Because, the Department of Labor investigated. DOL then found violations. And, now, DOL has now filed suit. See San Antonio Express News report.

It is not that hard to get legal advice about wages. The DOL and Texas Workforce Commission both provide free advice regarding how to pay employees. A person might have to wait on the phone a bit, but it is free. And, an employer can point to that advice later if the business is investigated. I expect these two businesses did not seek legal advice. This method of payment is nowhere close to kosher.

According to a May 28, 2017 article in the Austin American-Statesman, members of Congress, including Lloyd Doggett, asked the Department of Labor to change rules that shield frequent violators of USERRA. USERRA is the law that protects Guardsmen, Reservists and other service members from discrimination in their civilian jobs. Some employers just do not get it. They do discriminate frequently. Dept. of Labor knows who they are because DOL processes with administrative complaints filed by the Reservists.

In 2016, the House Veterans Affairs Committee opened an inquiry into the ,matter after the newspaper reported several employers in Texas frequently discriminated against Reserve members in their civilian jobs. DOL initially agreed to change their rules, but have not cooperated since. In Texas, some 16 different employers have had multiple complaints filed which DOL investigated. Those investigations resulted in a settlement or a finding of discrimination.

In 2016, the American-Statesman submitted FOIA requests to DOL seeking the names of the employers. But, the DOL refused, saying they need to protect the privacy of the service member. Lloyd Doggett met with DOL officials in December, 2016. They told him they feared that outing these employers would cause them to hire veterans less.

A review by the newspaper suggests some 40% of lawsuit filed based on USERRA are against state and federal agencies. Texas lead the nation in 2015 with 230 USERRA complaints filed with DOL.

The Trump administration has reportedly instructed departments to refuse requests from Democratic members of Congress, further obstructing Rep. Doggett’s efforts to seek transparency. See Austin American-Statesman report.

So, fewer “managers” will be eligible for overtime. The Department of Labor raised the salary rate at which overtime would apply. I previously wrote about this change here. The salary level for certain low level managerial jobs is currently $23,660. If a low level manager is paid that amount or less, s/he would be entitled to overtime. So, employers had some incentive to make persons who should be hourly “managers” in name only. See CBS news report.

The new regulation takes effect in December. Employers have time to become familiar with the new requirements.

The Department of Labor, Wage and Hour Division, has issued new interpretative guidance regarding independent contractors. As I have mentioned before, many employers are trying to stretch the limits of independent contractors to include as many employees as possible. See my post here. This trend has been ongoing for a decade or more. The Administrator’s Interpretation No. 2015-1 can be found here. The guidance makes it clear that the old common law test will not apply to cases under the Fair Labor Standards Act. Courts applying the FLSA should apply the “economic realities” test. DOL adds in a footnote that while many cases involve alleged independent contractors, many other cases involve purported “partners,” “owners,” or members of a limited liability company. In such instances, the economic realities test will still apply. The economic realities test essentially asks whether the worker is economically dependent on the employer. The Guidance addresses each factor in detail:

  • Is the work an integral part of the employer’s business? That is, if the employer is a grocery and it hires an electrician, then the electrician is likely to be found to be an independent contractor
  • Does the worker’s managerial skill affect the worker’s opportunity for profit or loss? If the employer schedules the hours and work time for the worker, that indicates the worker depends on the employer for profit. But, if the work, such as a cleaning company, schedules its own workers based on its own needs, that suggests the worker is independent.
  • How does the worker’s investment compare to the employer’s investment? Essentially, this factor addresses who provides the material and equipment for the work. For example in one case, farm workers provided their own gloves. That investment did not compare to the farm owner’s investment in tools and equipment.
  • Does the work performed require special skills or expertise? Permanency or indefinite work assignment suggest the worker is an employee.
  • What is the nature of the employer’s control of the work? If the employer merely assigns work goals or end products allowing the worker to determine how to create or effect that end product, then that lack of control indicates the worker is acting with some independence. Who decides the goal and who decides how to reach that goal?

These factors are not new. But, the Guidance does pull together the better caselaw on this critical test.

Department of Labor has released a Disability Nondiscrimination Law Adviser.  Once the reader answers some general questions, the adviser will provide some a customized list of statutes that apply to the reader’s particular business and the requirements of those statutes.  See DOL website.  The stated purpose of the Adviser is to allow employers to identify which disability nondiscrimination laws apply to their business.  

This Adviser is one in a series of electronic advisers regarding various employment statutes. 

 Periodically, the Department of Labor issues guidance on interpretation of the regulations and statutes regarding the Fair Labor Standards Act.  The FLSA is the statute hat requires overtime pay and payment of minimum wage.  The DOL has issued an opinion recently stating that it now believes mortgage loan officers are not exempt employees and are, therefore, entitled to overtime pay.  According to one commentator, this new interpretation will apply to employees who work primarily in the employer’s place of business and to employees who do not engage in cold-calling, contacting potential customers.  If you think you may have employees who fit these criteria, you should seek guidance regarding changes to be made as soon as possible. 

 Rio Grande attorney, Aaron Ramirez, explains nicely the problems with seeking redress for wage violations from the Department of Labor.  As he says, its better to seek relief through a private attorney.

Aaron points out for example that DOL does not normally seek liquidated damages.  Liquidated damages is a phrase referring to monies used to compensate the victim of a wage issue for emotional issues and to help punish the employer.  

In my own experience, DOL does little more than *maybe* issue a finding that the employer has violated the Fair Labor Standards Act (the minimum wage law).