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From the HR Hotline 2nd Quarter 2024

Zywave’s HR consultants continue to provide expertise and serve as a valuable resource for navigating the pressing challenges facing employers today. The HR Hotline fields dozens of questions each day from employers seeking answers to their HR questions.


In recent months, employers have been requesting clarification or seeking guidance on the

U.S. Department of Labor’s (DOL) new overtime rule; the status of the National Labor Relations Board’s (NLRB) 2023 Joint-employer rule; the U.S. Equal Employment Opportunity Commission’s (EEOC) EEO-1 reporting deadlines and requirements; and the current trend of “Watch Me Get Fired” videos. While questions surrounding these topics can vary based on locality, employer and individual circumstances, federal agencies offer guidance that can aid employers in addressing day-to-day challenges in the workplace.


This article explores some questions and answers to common HR situations.


How Can Employers Prepare for the DOL’s New Overtime Rule?

On April 23, 2024, the U.S. Department of Labor (DOL) announced a final rule to amend current requirements employees in white-collar occupations must satisfy to qualify for an overtime exemption under the Fair Labor Standards Act (FLSA). The final rule will take effect on July 1, 2024.


The FLSA white-collar exemptions apply to individuals in executive, administrative, professional (EAP) and some outside sales personnel and computer-related occupations. Some highly compensated employees (HCEs) may also qualify for an FLSA white-collar exemption.


To qualify for most white-collar exemptions, employees must meet the specified salary threshold, among other criteria.


Starting July 1, 2024, the DOL’s final rule increases the salary level from:


• $684 to $844 per week ($35,568 to $43,888 per year) for EAPs; and

• $107,432 to $132,964 per year for HCEs.


On Jan. 1, 2025, the salary level will then increase from:


• $844 to $1,128 per week ($43,888 to $58,656 per year) for EAPs; and

• $132,964 to $151,164 per year for HCEs.


The rule also enables the DOL to update the salary levels automatically every three years starting on July 1, 2027.


What Is the DOL’s New Overtime Rule?

The FLSA requires employers to pay employees overtime pay at a rate of 1.5 times their regular rate of pay for all hours worked over 40 in a workweek unless the employees qualify for an exemption under the FLSA. The FLSA provides several exemptions from the overtime pay requirements, the most common of which are the “white-collar” exemptions. These

exemptions apply primarily to executive, administrative and professional employees (EAPs) but also to some individuals in outside sales and computer-related occupations and certain HCEs.


To qualify for most white-collar exemptions, an employee must satisfy the following tests:


  • The salary basis test requires that the employee is paid a predetermined and fixed salary that does not fluctuate based on the quality or quantity of work.

  • The salary level test requires that the employee meets a minimum specified amount to qualify for the exemption. The current salary threshold is $684 per week ($35,568 per year). The current compensation threshold for HCEs is $107,432 per year ($35,568 of which must be earned on a salary basis). However, outside sales personnel and certain other professions, including doctors, lawyers and teachers, are not subject to the salary level test.

  • The duties test requires that an employee’s actual work responsibilities match the description the FLSA assigns to the exemption. HCEs are subject to a less restrictive duties test.


The DOL’s final rule amends current requirements employees in white-collar occupations must satisfy to qualify for an FLSA overtime exemption. To qualify for this exemption under the final rule, white-collar employees must satisfy the new standard salary level tests.


Under the final rule, starting July 1, 2024, the DOL will update the standard salary level and HCE’s total annual compensation requirements using existing methodology from the 2019 final rule (i.e., setting the standard salary level at the 20th percentile of weekly earnings of full-time salaried workers in the lowest-wage Census Region and the HCE total annual compensation threshold at the annualized weekly earnings of the 80th percentile of full-time salaried workers nationally) and current data as follows:


  • The salary level will increase from $684 per week to $844 per week (equivalent to $43,888 per year); and

  • The HCE total annual compensation threshold will increase from $107,432 to $132,964.


Then, on Jan. 1, 2025, the DOL will implement the new salary methodology, setting the standard salary level at the 35th percentile of weekly earnings of full-time salaried workers in the lowest-wage Census Region and the HCE total annual compensation threshold at the annualized weekly earnings of the 85th percentile of full-time salaried workers nationally. This will result in the following changes:


  • The salary level will increase from $844 per week to $1,128 per week (equivalent to $58,656 per year); and

  • The HCE total annual compensation threshold will increase from $132,964 to $151,164


The final rule introduces a mechanism to regularly update the standard salary level and HCE total annual compensation thresholds, including an initial update to reflect earnings growth, which on July 1, 2024. This update will be followed by triennial updates in the future that will apply updated earnings data to the methodologies in effect at the time of the updates. The next three-year update will take place on July 1, 2027. At least 150 days before the date of a scheduled update to the standard salary level and the HCE total annual compensation requirement, the DOL will publish in the Federal Register a notice with the new earnings levels. However, the DOL may temporarily delay a scheduled update for 120 days where unforeseen economic- ic or other conditions warrant.


How Can Employers Prepare for the New Overtime Rule?


Identify Affected Employees

Employers should review payroll data to identify which employees will be affected by the new overtime rule. Specifically, the final rule will affect employees who are classified as exempt and earn an annual salary of less than $43,888, and HCEs who are classified as exempt and earn annual compensation of less than $132,964 as of July 1, 2024. In determining total compensation for purposes of the HCE exemption, only $43,888 of such compensation must be paid on a salary basis, and the remaining compensation may consist of commissions, nondiscretionary bonuses and other nondiscretionary compensation. Employers’ efforts to prepare for the new overtime rule should also include identifying any employees that will be affected by the further increase to the standard salary level ($58,656) and HCE total annual compensation threshold ($151,164) that will occur on Jan. 1, 2025.


Employees who are already classified as nonexempt from overtime under the FLSA will not be affected by the new overtime rule, regardless of their compensation.


Determine Treatment of Affected Employees


Highly Compensated Employees

To qualify for a white-collar exemption, HCEs are subject to a more relaxed duties test, which requires only that the employee’s primary duty must be office or nonmanual work and the employee must customarily and regularly perform at least one of the bona fide exempt duties of an EAP employee. For HCEs who are currently classified as exempt but earn less than the annual compensation threshold under the final rule ($132,964 as of July 1, 2024, and $151,164 as of Jan. 1, 2025), employers should assess whether they may still qualify for an exemption under the more stringent duties test applied to other white-collar exemptions. If they cannot satisfy that duties test, then employers must decide whether to raise their salaries to meet the new HCE compensation threshold or reclassify them as nonexempt employees once the new rule becomes effective, as described below.


All Other Affected Employees

After identifying any affected employees, employers will need to take one of the following actions with respect to such employees as of the rule’s effective date:


  • Raise their salaries to satisfy the salary level test for an exempt classification; or

  • Reclassify the employees as nonexempt from overtime.


Employers are not required to take the same approach for all affected employees. However, it is generally considered best practice to assign the same classification to employees with the same job title and duties. Thus, employers may wish to make such determinations on a position-by-position basis rather than individually.


Further, to the extent employers choose to reclassify affected employees as nonexempt, employers will need to decide whether to pay newly nonexempt employees on an hourly rather than salary basis. Nonexempt employees are typically, but not required to be, paid on an hourly basis. Paying nonexempt employees hourly generally simplifies the process of determining overtime pay and ensures employees are paid only for hours worked. However, some employees view salaried positions as more prestigious and appreciate the predictability of a salary that does not fluctuate between paychecks. Therefore, employers may also need to consider the potential impacts on employee morale.


Track and Analyze Hours Worked

Under the FLSA, employers are required to track hours worked by nonexempt employees for purposes of calculating overtime (i.e., payment for hours worked in excess of 40 in a work- week). Employers may better prepare for the new rule by tracking and analyzing the hours worked by affected employees. This tracking and analysis can help employers determine the potential cost of reclassification and influence an employer’s decision to either reclassify affected employees as nonexempt or increase their salaries. For example, if affected employees rarely work more than 40 hours per week, it may be more cost-effective to reclassify them as nonexempt. Conversely, if the affected employees regularly work more than 40 hours per week, it may be more cost-effective to avoid paying substantial overtime by increasing their salaries to retain their exempt status.


Review and Update Employer Policies


Overtime

Employers who want to limit the amount of overtime worked by reclassified employees should consider a policy of requiring overtime hours to be approved in advance and disciplining employees who violate such policy (employers are still required to pay for all overtime work even if not preapproved). However, employees who regularly work more than 40 hours per week as exempt employees may not be able to accomplish as much work if they are limited to working a maximum of 40 hours per week after reclassification. Therefore, employers that choose to restrict overtime may also consider whether to modify performance expectations, shift duties or responsibilities, or hire additional workers.


Timekeeping

Under the new overtime rule, employers may consider how existing timekeeping practices will apply to any affected employees the employer reclassifies as exempt and whether any modifications are required. For example, if employers reclassify remote or hybrid workers as nonexempt, employers will need to ensure that such workers will be able to record time re-

motely. Moreover, employers may need to establish additional guardrails for work performed at irregular times or off-site. For example, if affected employees conduct work remotely outside of business hours (e.g., answering emails during evenings or weekends), employers may need to modify their policies to ensure that such time is properly recorded or require all work to be conducted during business hours.


Other Employee Policies

Employers may also consider reviewing existing policies that differentiate between exempt and nonexempt workers and consider potential implications for reclassified employees. For example, employers may offer different vacation policies or bonus opportunities depending on an employee’s exempt status.


Develop Internal Communications

Employers that choose to reclassify affected employees should communicate the change with employees in advance of the date such reclassification takes effect. The communications should generally include an explanation of the change in employee classification, the date such change goes into effect, a description of the organization’s timekeeping policies (and meal and rest break policies, if applicable), the employees’ obligations under such policies, and a description of any changes under employer policies that differentiate between exempt and nonexempt employees (e.g., vacation policies). Some employees could view the reclassification to nonexempt as a demotion, so employers may want to reassure employees that the change has no effect on their status and emphasize the positive aspects of reclassification, such as overtime eligibility.


Employers should also notify managers of the new requirements so that they understand their obligations with respect to newly nonexempt employees, such as reviewing and authorizing overtime. Employers may also consider notifying payroll personnel of any potential changes to employee paychecks, such as paying and calculating overtime and converting salaried employees to hourly employees. As the DOL’s final rule has been published, employers may con- sider preparing and issuing these communications now. However, the final rule is expected to face legal challenges similar to those with respect to the 2016 overtime rule, which resulted in substantial delays and was ultimately blocked and abandoned by a new administration. Therefore, employers should watch for updates as they develop and issue internal communications regarding classification and other changes.


Prepare Employee and Manager Trainings

Employees who are reclassified may be unfamiliar with timekeeping and other practices applicable to only nonexempt employees. Therefore, in addition to communicating the change, employers may consider training reclassified employees on timekeeping, hours scheduling, overtime approval, meal and rest breaks, and any other policies applicable only to nonexempt employees prior to the effective date of their reclassification. Managers of the reclassified employees may also need additional training to understand their obligations with respect to such employees, such as approving or denying overtime and ensuring hours are accurately tracked and reported. While employers can begin preparing training programs and conducting training now, as noted above, they should watch for updates and monitor potential challenges.


Audit Exempt Employees’ Job Duties

Although the final overtime rule does not make any changes to the duties requirements for exempt classification, employers may also consider a broader audit on whether their exempt employees’ job duties and responsibilities satisfy the FLSA’s duties tests for white-collar exemptions. Employers may also wish to review existing job descriptions for exempt positions to ensure that they accurately reflect the work performed.


Review Applicable State and Local Overtime Laws

Some employers may already be subject to state or local laws that impose a higher salary threshold to qualify for an overtime exemption. Therefore, employers should continue to evaluate proper employee classifications using applicable state and local criteria as well as federal criteria.


Additionally, certain state and local laws, including those regarding meal and rest breaks, may only apply to nonexempt employees. Employers who reclassify employees as nonexempt should determine whether any such state or local wage and hour laws may apply to the reclassified employees and, if so, should inform the employees of these additional rights and benefits.


Monitor for Updates and Legal Challenges

While employers may take steps now to prepare for the final rule, they may want to wait to implement any concrete changes before the final rule takes effect. As noted above, the final rule is expected to face legal challenges. Accordingly, employers should watch for updates and prepare for potential uncertainty following the final rule’s publication.


Employers can explore these government resources for more information:

  • DOL’s news release on the final rule

  • DOL’s website

  • DOL’s FAQs on the final rule

  • Federal Register notice


What Is the Status of the NLRB’s 2023 Joint- employer Standard?

On Oct. 27, 2023, the NLRB published a final rule that sought to establish new criteria to determine joint-employer status. Joint-employment situations can happen when two or more employers share personnel hiring, supervision and management practices. When a joint-employment status exists, joint employers are equally responsible for compliance with applicable laws and regulations.


Originally, the final rule was to become effective 60 days after publication on Dec. 26, 2023. However, the rule’s effective date was extended several times to March 11, 2024. On March 8, 2024, a federal judge in the U.S. District Court for the Eastern District of Texas vacated the final rule. As a result, the 2020 joint-employer rule remains in effect, calling into question the future status of the 2023 rule.


Joint Employment

The NLRB’s joint-employer rule applies to labor issues related to the National Labor Relations Act (NLRA) and focuses on the amount of control an employer exerts over the employment relationship. Whether joint employment is by design or unintentional, joint employers are equally:


  • Liable for unfair labor practices committed by other joint employers

  • Required to bargain with the union that represents jointly employed workers

  • Subject to union picketing or other economic pressure if there is a labor dispute


To determine whether a joint-employer relationship exists, employers must evaluate the degree of control they exert over “essential terms and conditions of employment.” Essential terms and conditions of employment include wages, benefits, hours of work and employee hirings, discharges, discipline, supervision and direction.


The 2020 Joint-employer Standard

The NLRB adopted the current joint-employer standard on April 27, 2020. The 2020 standard considers the “substantial direct and immediate control” employers have over essential terms and conditions of employment for individuals who are employed by another organization.


Specifically, the 2020 joint-employer standard indicates that a business is a joint employer of another employer’s employees only if the degree of joint control is of sufficient magnitude to lead to the conclusion that the joint employer meaningfully affects matters relating to the employment relationship.


In addition, under the 2020 rule, other evidence may suggest (but not prove) the existence of joint-employer status, particularly when the evidence points to indirect control or the right to exert control through contract or agreement (especially when control is never exercised).


The 2023 Joint-employer Final Rule

The 2023 rule sought to rescind the 2020 joint-employer standard, replacing it with a more in- clusive law, which would have made it easier for employers to be classified as joint employers. This rule was based on common-law agency principles as applied in the particular context of the NLRA. Notable changes to the 2023 joint-employer standard included the following:


  • A clarification of the definition of “essential terms and conditions of employment”

  • An identification of the types of control that are necessary to establish joint-employer status and the types that are irrelevant to the joint-employer inquiry

  • A description of the bargaining obligations of joint employers


The 2023 rule also created a more inclusive standard for determining joint-employer status by removing the requirement that joint employers must “possess and exercise … substantial direct and immediate control” over essential terms and conditions of employment. Specifically, the rule considered the alleged joint employers’ authority to control essential terms and conditions of employment, regardless of whether such control was exercised. According to the NLRB, the 2023 rule intended to provide extensive guidance to parties regarding their rights and respon- sibilities in situations where joint-employer status had been established.


Under the now-vacated 2023 final rule, two or more employers would be considered joint employers if they shared or codetermined the essential terms and conditions of employment for two or more employees. Employers would share or codetermine the essential terms of employment when they possessed the authority to control or exercised the power to control one or more of the employee’s essential terms and conditions of employment. The authority to control or exercise this power may be direct, indirect (through an intermediary) or, in some cases, both.


The vacated 2023 rule’s essential terms and conditions of employment were limited to:


  • Wages, benefits and other compensation

  • Hours of work and scheduling

  • The assignment of duties to be performed

  • The supervision of the performance of duties

  • Work rules and directions governing the manner, means and methods of the performance of duties and the grounds for discipline

  • The tenure of employment, including hiring and discharge

  • Working conditions related to the safety and health of employees


Impact on Employers

Considering the ruling of the U.S. District Court for the Eastern District of Texas, employers should continue to rely on the 2020 joint-employer standard to determine whether joint employment exists. However, employers should continue to monitor the status of the 2023 joint-employer rule, as the NLRB could take action to press the rule forward.


Employers can explore these government resources for more information:


  • NLRB's news release on the final rule

  • NLRB's website

  • NLRB’s Fact Sheet on the final rule

  • Federal Register notice


What Are EEO-1 Reporting Requirements?

Under Title VII of the Civil Rights Act, employers with 100 or more employees and certain federal contractors must report this data to the EEOC by March 31 every year. This report, known as the EEO-1 Report, is a federally mandated survey that collects workforce data categorized by race, ethnicity, sex and job category.


The collection of this data from 2023 has been delayed, and the portal for submitting EEO-1 Reports will not even be opened before the usual deadline in 2024. Instead, the EEOC expects to open the portal for employers to begin entering 2023 information on April 30, 2024.


The deadline for employers to complete their submissions of 2023 information is June 4, 2024. Employers should monitor the EEOC’s EEO-1 webpage for updates.


EEO-1 reporting for the previous several years was delayed as well. In 2017 and 2018, employers subject to EEO-1 reporting were required to submit additional information about employee pay or work hours (known as “Component 2” data). Those additional requirements were discontinued due to court challenges, but the EEOC has indicated that they may be reinstated in future years.


Employers filing EEO-1 Reports for the first time must register to receive a company login, password and further instructions for filing from the EEOC.


Employers Subject to EEO-1 Reporting Requirements

With limited exceptions, the following entities must file EEO-1 Reports by the EEOC’s deadline:


  • A private employer with 100 or more employees (with limited exceptions for schools and other organizations NLRB’s Fact Sheet on the final rule

  • A private employer with between 15 and 99 employees if they are part of a group of employees that legally constitutes a single enterprise, which employs a total of 100 or more employees

  • A federal contractor with 50 or more employees who is either a prime contractor or first-tier subcontractor and has a contract, subcontract or purchase order amounting to $50,000 or more


Enforcement

Although the EEOC sends notification letters to employers it knows to be subject to the EEO-1 requirements, all employers are responsible for obtaining and submitting the necessary information before the appropriate deadline. An employer who fails or refuses to file an EEO-1 Report may be compelled to do so by a federal District Court. Federal contractors also risk losing their government contracts for failing to comply.


Hardship Extension

Employers may send a written request to the EEOC for an exemption or special reporting procedures if preparing or filing an EEO-1 Report would create undue hardship. Employers may also obtain a one-time, 30-day extension of the EEO-1 Report filing deadline by emailing a request to the EEOC. However, the EEOC does not grant any exemptions or extensions requested after the filing deadline.


Updated Resources

According to the EEOC, its online message center for employers to ask questions and obtain other support for EEO-1 reporting will open along with the portal on April 30, 2024. The agency also released updated instructions and specifications for 2023 reporting. These new resources will be posted on EEOC’s EEO-1 Data Collection site as they become available.


For more information, employers can review information regarding the EEO-1 online filing system or visit the EEOC’s website.


How Can Employers Navigate “Watch Me Get Fired” Videos?

An increasing number of employees are recording their termination meetings with HR representatives, managers and supervisors and posting them on social media platforms, including TikTok, Instagram and X (formerly Twitter). These videos, commonly called “Watch Me Get Fired” videos, have become a trend among workers in various industries, including fast-food employees, office workers and teachers. In some cases, these videos have gone viral, exposing businesses to heavy reputational backlash and sometimes legal consequences due to substandard termination practices. Despite the high stakes organizations face, some employers are still mishandling terminations.


What Are “Watch Me Get Fired” Videos?

“Watch Me Get Fired” videos are where employees film themselves getting terminated or laid off. These videos often show private conversations between employees and supervisors, managers and HR representatives. Workers then post these videos to social media, publicly giving light to a private moment that many individuals have attempted to hide in the past. Some videos receive millions of views.


This recent trend disrupts the traditional divide between employees’ personal and professional lives and what they choose to post online. In many cases, remote work has allowed workers to feel emboldened to speak out about their employers online. These videos may also be driven, in part, by Generation Z and millennials’ desire to share more of their lives on social media. “Watch Me Get Fired” videos demonstrate how younger generations turn to social media to speak out when they think they’ve been treated unfairly or when they want feedback or support.


For some employees, these videos help them to process difficult emotions that often accompany being let go from their jobs. For others, these videos can lead to new employment opportunities. However, “Watch Me Get Fired” videos can also bring negative consequences to the individual filming and sharing the video, including being stigmatized or having their severance withheld, as these individuals may risk violating severance and other employment-related agreements. On the other hand, they may reveal an employer’s illegal behavior when terminating employees, subjecting organizations to potential legal exposure and liability, especially since these videos can used as evidence in a legal proceeding. Even when these videos do not result in legal action, they can cause severe reputational harm to an employer.


What Are “Watch Me Get Fired” Videos?

Implementing certain practices and procedures can help employers limit their potential legal exposure and liability when addressing this recent trend. Employers should consider the following best practices to limit legal exposures and reputational consequences stemming from “Watch Me Get Fired” videos:


  • Limit legal pitfalls. Before conducting termination meetings, employers should ensure they avoid saying anything that could increase the risk of or lead to legal liabilities. Training those involved in termination meetings to be aware of workers’ rights and legal protections can help ensure these conversations are conducted appropriately and avoid prohibited con- duct or behavior.

  • Be prepared for the conversation. Employers must consider that anything that happens in the workplace can easily be recorded and shared online. Thus, it’s important to consider how a termination conversation will be perceived by the employee and, potentially, others. Thinking about the message and how it will impact employees can help ensure that such conversations are conducted in a professional manner. This may include developing talking points, anticipating what questions the employee will ask or determining what information is necessary to share with the individual.

  • Stay professional. Recorded termination meetings that go poorly or are conducted in an unprofessional manner can damage an organization’s reputation and brand. Lacking empathy, being unprepared or not involving a worker’s direct manager can send the wrong message to the worker and general public, causing an employer to appear overly harsh or insensitive. Individuals participating in termination meetings should conduct themselves professionally, whether the meeting is in-person or virtual.

  • Avoid false statements. False statements can show bad faith and lead to legal troubles and reputational harm. Employers should avoid making statements during termination meetings, including promises of benefits or privileges to which an employee would not be entitled.

  • Establish workplace policies. Employers can implement policies addressing audio, video and other recordings in the workplace. This may include a general prohibition against recording workplace meetings and conversations without the consent of all participants. Such workplace policies can provide employers with grounds to terminate individuals who violate them. Additionally, establishing a practice of asking employees at the beginning of termination meetings to confirm whether they’re recording the conversation can be an effective way to avoid or minimize the potential legal or reputational harm from recorded termination meetings. However, in some circumstances, employees may have the right to make recordings at the workplace (e.g., engaging in protected concerted activity under the NLRA). Therefore, employers should ensure that workplace prohibitions against recordings are consistent with federal, state and local laws.

  • Use performance management. Lack of performance management can lead to a negative termination experience or even surprise, which can often increase the odds of an individual taking legal action or causing reputational harm. This is especially true if an individual hasn’t been made aware of their performance issues before the termination meeting. Conducting regular performance evaluations and proactive employee management can help lessen the surprise when an employee is terminated for performance issues. Employers should establish a transparent work culture where issues, concerns and goals are discussed openly and often. This can help employees recognize when they’re not meeting expectations. Employers should do their best to deliver termination messages in a compassionate and dignified manner. Conducting termination meetings as if the world were watching can help organizations reduce the risk of finding themselves on the negative end of a viral sensation. By establishing best practices for terminations, employers can improve their offboarding processes, strengthen their brands and limit legal risks.




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