Tuesday, May 17, 2016

FLSA Fundamentals: The Taxing Taxonomy of Exempt Classifications

*In honor of the Fair Labor Standard Act’s 78th birthday and the highly anticipated changes to the DOL overtime regulations, the Modern Workplace is running a special multipart series entitled “FLSA Fundamentals” which will cover the basics of this important law and culminate in a discussion of the final changes to the regulation upon their release. This is the third post in that series.*

Given the time-intensive and nuanced analysis involved in calculating hours worked by non-exempt employees, compensable and non-compensable working time, and the regular rate of pay, many employers leap at the opportunity to avoid this rigmarole by classifying employees as exempt. As the next few posts in the “FLSA Fundamentals” series will demonstrate, however, properly classifying employees as exempt can be just as harrowing as non-exempt employee requirements. Employers need to beware of misclassifying employees as exempt, because misclassification can lead to multi-claimant lawsuits, awards of substantial damages, and enormous legal defense costs.

Thursday, May 12, 2016

The Federal Defend Trade Secrets Act Becomes Law

The Federal Defend Trade Secrets Act (“DTSA”), which was featured in our blog post last week, was signed into law by President Obama on Wednesday, May 11, 2016. As discussed in last week’s post, this important new federal law offers another avenue for employers to protect their valuable trade secrets. The DTSA creates two significant benefits for companies: (1) consistent and uniform law nationwide; and (2) guaranteed access to federal courts. It also provides for injunctive relief and additional monetary remedies. Now that the DTSA has been signed into law, companies seeking the benefit of the DTSA should consult legal counsel to add the new required notice to all confidentiality and trade secret agreements. And as always, employers should carefully identify their valuable trade secrets and take steps to protect that information. That much remains the same.

Wednesday, May 4, 2016

New Federal Trade Secrets Law – A New Weapon for the Protection of Employers’ Confidential Information

After several years of consideration, the U.S. Congress has finally passed legislation that will create a federal statute for the protection of trade secrets, entitled the Defend Trade Secrets Act (“DTSA”). The DTSA had strong bipartisan support, passing in the Senate by a vote of 87-0 (on April 4) and passing by a vote of 410-2 in the House of Representatives (on April 27). President Obama has previously indicated that he will sign the legislation into law and that action is expected to occur soon. With its enactment, the DTSA will represent the first federal law protecting companies’ trade secrets.

Prior to the enactment of this law, businesses have obtained protection of their trade secrets on a state-by-state basis under state statutes. Forty-eight states have adopted a version of the Uniform Trade Secrets Act (“UTSA”), including Minnesota. Although there is significant similarity between most states’ version of the UTSA, some differences do exist and, perhaps more importantly, the courts in some states are more receptive to claims under that statute than courts in other states. The DTSA will not preempt (supplant and replace) state law and claims now will exist under both federal law and state law for the misappropriation of trade secrets (except for New York and Massachusetts, the only two UTSA hold-outs).

Monday, May 2, 2016

FLSA Fundamentals: What is Time? Compensable vs. Non-Compensable Time

*In honor of the Fair Labor Standard Act’s 78th birthday and the highly anticipated changes to the DOL overtime regulations, the Modern Workplace is running a special multipart series entitled “FLSA Fundamentals” which will cover the basics of this important law and culminate in a discussion of the final changes to the regulation upon their release. This is our second post in that series.*

Additional contributions by Dorrie Larison.


As discussed in our previous FLSA blog post, it is crucial for an employer to accurately calculate a non-exempt employee’s “regular rate of pay.” If you missed it, the correct calculation method for the “regular rate of pay” can be found here.

It is also important to remember that employers are required to pay their non-exempt employees for all hours worked, even when the employer did not expressly request or authorize the work. Many employers have policies or rules requiring non-exempt employees to take an unpaid lunch break and to obtain advance permission to work overtime hours. Even when a non-exempt employee violates such rules, the employee typically must be paid for the work time, given that the FLSA provides that the employee must be paid so long as the employer “suffers or permits” the employee to work. An employee can be disciplined for violating an employer’s break and work time rules, but generally still must be paid. Again, employers must pay non-exempt employees for all hours worked.
All means all.

Friday, April 29, 2016

FLSA Fundamentals: Calculating Regular Rate of Pay and Overtime Pay

*In honor of the Fair Labor Standard Act’s 78th birthday and the highly anticipated changes to the DOL overtime regulations, the Modern Workplace is running a special multipart series entitled “FLSA Fundamentals” which will cover the basics of this important law and end with a discussion of the final changes to the regulation upon their release.*

As most employers are well aware, employees who are classified as non-exempt under the federal Fair Labor Standards Act (“FLSA”) must be paid overtime at a rate of one and one-half their regular hourly rate of pay for all hours worked in excess of 40 hours in a workweek.

Friday, April 22, 2016

You Can't Make This Stuff Up: The Unintended Employment Law Issues with Paying Employees in Meth


*This is the first in a recurring series of “You Can’t Make This Stuff Up” posts.  One fun part of working in the employment law or HR world is getting to track new and interesting employment law developments and navigate situations that sometimes are stranger than fiction. In our “You Can’t Make This Stuff Up” posts, we’ll bring to your attention some of the strange and sometimes unbelievable situations that employers and employees face.*


In recent “stranger than fiction” news, a Mankato employer was raided Thursday by Minnesota drug agents because it allegedly gave its employees an unusual bonus: meth.  While the criminal law implications are obvious, it takes an experienced employment attorney or HR professional to get in the weeds (pun intended) and to note some potential wage and tax issues posed by the unusual method of paying employees with illicit drugs.  Under the federal Fair Labor Standards Act and many state laws, wages must be paid in cash or by a negotiable instrument – not, of course, drugs.  Also, any payment to an employee for services is taxable W-2 income, and it’s a real head scratcher to try to figure out how an employer might accurately value an illicit drug and comply with employee withholding and employer tax obligations.  It also may be just as challenging to figure out how the value of an illicit drug payment might impact overtime pay obligations.  Where a bonus is non-discretionary, it must be included in an employer’s calculation of a non-exempt employee’s regular hourly rate for overtime purposes.

So, let this reported incident serve as a reminder that the FLSA can crop up in unexpected places and that, just in case you ever wondered, you really shouldn't pay employees in the form of an illegal drug! 


Thursday, April 21, 2016

Court Finds Obesity is Not an ADA Disability without an Underlying Condition

Last week, we wrote about employer best practices with respect to responding to possible employee medical issues. A recent case out of the Eighth Circuit showcases one employer’s creative approach to thinking about possible future medical issues.

BNSF Railway Company, based in Nebraska, reportedly has had a policy of not hiring any applicant for a safety sensitive position if the applicant has a Body Mass Index (BMI) of 40 or higher. According to the Centers for Disease Control and Prevention, a person with a BMI of 30 or higher is considered obese.  In the recent Eighth Circuit case, Plaintiff Melvin Morriss alleged that he applied for a machinist position with BNSF and received an offer of employment contingent on a satisfactory medical review. At the time of Morriss’ medical review, he was found to have a BMI of 40.9.  BNSF allegedly revoked Morriss’ conditional job offer pursuant to its BMI policy, notifying Morriss that he was “not currently qualified for the safety sensitive Machinist position due to significant health and safety risks associated with Class 3 obesity ([BMI] of 40 or greater).”  Morriss sued BNSF for disability discrimination, alleging that his obesity was an actual disability under the federal Americans with Disabilities Act (ADA) and that BNSF also unlawfully regarded him as disabled.