With the calendar having turned to 2022, it is time to look into the crystal ball and make a few predictions for the year ahead related to the wage and hour world.
It is a new year and that means a fresh round of compliance reporting obligations for many companies. Here’s what lies ahead for 2022.
On January 6, 2022, the U.S. Department of Labor’s Wage and Hour Division (DOL/WHD) and the National Labor Relations Board (NLRB) announced a memorandum of understanding (MOU) between the agencies to share information, collaborate, and coordinate on investigations of potential violations of federal labor and employment laws. The MOU places particular emphasis on worker misclassification (both independent contractor and joint-employment relationships) and retaliation and represents the latest in the Biden administration’s efforts to ramp up enforcement in these areas.
On December 22, 2021, Governor Jay Inslee sent a letter to Washington’s Employment Security Department (ESD) ordering it to not collect premiums under the Washington Cares Fund program until the legislature addresses some of the law’s issues. The letter acknowledged that “legislative leadership has strongly encouraged the employer community to pause collection of premiums from employees.”
Changes to Oregon employment laws taking effect next year will be keeping human resources professionals very busy this holiday season and into the new year in the Pacific Northwest.
In 2022, while the federal minimum wage will remain at $7.25 per hour for non-tipped employees and $2.13 per hour for tipped employees, several states’ minimum wage rates will increase. The chart below lists the state (and certain major locality) minimum wage rate increases for 2022—and future years if available—along with the related changes in the maximum tip credit and minimum cash wage for tipped employees.
On December 17, 2021, Washington Governor Jay Inslee, Senate Majority Leader Andy Billig, and House Speaker Laurie Jinkins released a joint statement announcing that the premium assessment under the Washington Cares Fund would be delayed. Employers had been set to collect premiums from Washington employees starting on January 1, 2022, but with this announcement, state leaders have “strongly encourage[d]” employers to “pause on collecting premiums.”
On November 24, 2021, the “traffic light” coalition, consisting of the Social Democratic Party of Germany (SPD), the Free Democratic Party (FDP), and Bündnis 90/Die Grünen (the Greens), reached an agreement on its coalition treaty.
In a much-awaited decision, the Supreme Court of the United States indicated that it would consider whether the Federal Arbitration Act (FAA) preempts California’s rule prohibiting arbitration of Private Attorneys General (PAGA) claims under the California Labor Code. Depending upon the high court’s ultimate ruling, the case has the potential to upend wage and hour litigation in California.
The Mexican National Commission on Minimum Wages (Comisión Nacional de los Salarios Mínimos or CONASAMI) approved, by a majority vote on December 01, 2021, an increase to the daily minimum wage applicable in Mexico (including the corresponding amount applicable in the Free Zone of the North Border (Zona Libre de la Frontera Norte or ZLFN).
On November 10, 2021, after a public hearing and comment submission period, the Colorado Department of Labor and Employment (CDLE) published three final rules: (1) the Colorado Overtime and Minimum Pay Standards Order #38 (COMPS 38), (2) the 2022 Publication and Yearly Calculation of Adjusted Labor Compensation Order (2022 PAY CALC Order), and (3) the updated Wage Protection Rules. All these rules go into effect on January 1, 2022, and have significant implications for employers doing business in the state.
On October 28, 2021, the U.S. Department of Labor (DOL) released a final rule that may cause many employers in the restaurant, hospitality, and service industries to rethink and/or end their use of tip credits under the federal Fair Labor Standards Act (FLSA). Under the FLSA, an employer that meets certain requirements may count a limited amount of the tips its tipped employees receive as a credit toward its federal minimum wage obligation—a practice which is known as a “tip credit.”
To address the prevalent and ongoing practice of permitting employees to work from home, a new California law authorizes employers to provide required workplace notifications to their employees as attachments to emails. Senate Bill (SB) No. 657 was signed into law on July 16, 2021. While the new law maintains the requirement to physically display mandatory postings in the workplace, SB 657 also provides California employers with a new way to provide important notifications to employees about wage and hour issues that could help deter employers from class and collective action liability regarding such claims.
Employers will soon face stricter financial penalties for keeping their employees’ tips under a final rule published by the U.S. Department of Labor (DOL) on September 24, 2021. Section 3(m)(2)(B) of the Fair Labor Standards Act (FLSA) prohibits employers—including “managers and supervisors”—from keeping employees’ tips “for any purposes,” regardless of whether employers claim a tip credit.
A recent amendment to child support laws will impose new and potentially onerous requirements on Florida businesses, starting October 1, 2021. The new law removes the current 250-employee threshold for new hire reporting, and, for the first time, requires businesses to report information regarding certain independent contractors.
On July 15, 2021, in Ferra v. Loews Hollywood Hotel, LLC, the Supreme Court of California set forth a new rule requiring that premiums for meal, rest, and recovery break violations be paid at the regular rate of pay.
The issue of the proper application of the highly compensated employee exemption under the Fair Labor Standards Act (FLSA), as it applies to employees paid on a “day-rate” basis in the oil and gas industry, has been a hotly debated issue in recent years, especially in the Fifth Circuit Court of Appeals.
On September 9, 2021, a California Court of Appeal issued its ruling in Wesson v. Staples the Office Superstore, LLC, delivering a welcome victory to employers battling representative actions under the Private Attorneys General Act (PAGA). Under the 2004 law, an “aggrieved employee” is empowered to commence a PAGA representative action on behalf of all other “aggrieved employees” to seek civil penalties for alleged violations of the California Labor Code.
Massachusetts is seeing an increase in Tips Act claims, and the Massachusetts Supreme Judicial Court (SJC) just reinforced that a lack of clarity in fee- and tip-related documentation may result in employer liability, including mandatory treble damages and attorneys’ fees. The Massachusetts Tips Act requires that an employer or person who collects “service charges” or “tips” (as those terms are defined under the act) remit the proceeds of those charges to service employees and waitstaff in proportion to the services the employees provided to the employer.
On August 11, 2021, the Minnesota Supreme Court issued a decision of significance to any owner or manager of residential properties in Minnesota that employs live-in caretakers or property managers. The court confirmed that such businesses and their live-in employees may enter into agreements that include the payment of rent credits toward employees’ wages, as long as those agreements comply with certain legal requirements.
Over the past 16 months, a quiet labor and employment law revolution has been underway in Virginia. In the first quarter of 2021, the Virginia General Assembly doubled down legislative initiatives, imposing several additional labor and employment changes that will present challenges for many employers across the Commonwealth. By way of example, consider the new Virginia Overtime Wage Act (VOWA), Va. Code § 40.1-29.2, the wage and hour implications of which significantly deviate from requirements in the Fair Labor Standards Act (FLSA).
In 2021, Washington established a long-term care benefit program for Washington workers called the WA Cares Fund. In short, the program implements a mandatory 0.58 percent payroll deduction on employee wages to create a state trust fund, which, beginning in 2025, will be used to fund certain long-term care costs for eligible Washington workers. Each eligible Washington worker is entitled to a lifetime benefit of up to $36,500, which will be adjusted annually for inflation. The regulatory scheme implementing the program is still being developed, and we will update the below information on our Washington blog about the program as the regulatory rules are finalized and implemented.
California Assembly Bill (AB) 1003 would create a new type of grand theft in the state: a company’s “intentional theft of wages” of more than $950 from any individual employee, or $2,350 total from 2 or more employees, in a 12-month period. The bill requires that the theft be intentional, through fraud and while knowing that the wages are due to the employee. The bill also defines “wages” to include “wages, gratuities, benefits, or other compensation.”
On July 8, 2021, North Carolina Governor Roy Cooper signed Senate Bill (SB) 208, An Act Making Various Changes to the Labor Laws of North Carolina, which includes changes to the pay notice provisions for employees and payment of final wages to separated employees. The amendments to the North Carolina Wage and Hour Act (NCWHA) (N.C. Gen. Stat. § 95-25.1 et seq.) include changes to the employer-provided notice to employees concerning compensation at both the outset of employment and prior to any reduction in pay. S
The pandemic continues to loom large over the California legislature this year, as indicated by the bills advancing through the legislative process. Below is a summary of the major employment law bills that are working their way through the state Assembly and Senate. The bills pertain to the expansion of medical and sick leave, postings for employees working remotely, and warehouse production quotas for facilities that have ramped up operations during the pandemic.
On June 30, 2021, Pennsylvania Governor Tom Wolf signed an approximately $40 billion state budget package. In exchange for increased funding for public schools in the state budget, Governor Wolf agreed to repeal Pennsylvania’s new overtime regulations, which were set to increase the minimum salary that employers must pay to certain salaried employees to classify them as exempt from overtime requirements under the Pennsylvania Minimum Wage Act of 1968.
On July 22, 2021, the U.S. Department of Labor (DOL) published a notice of proposed rulemaking to outline the standards and procedures that it will use to administer President Joe Biden’s Executive Order 14026, which he signed on April 27, 2021. Executive Order 14026 proposed an increase to the minimum wage for workers performing work on federal contracts to $15 per hour beginning January 30, 2022. The proposed rule applies only to federal contractors. It builds upon Executive Order 13658 signed by then-president Barack Obama that established a minimum wage of $10.10 for federal contractors with annual increases for inflation. The current rate is $10.95 per hour; the minimum wage for tipped federal contract workers is $7.65 per hour. Below is a brief summary of the scope of the DOL’s proposed rule and changes, if finalized.
In November 2020, the Colorado Department of Labor and Employment (CDLE) adopted Colorado Overtime and Minimum Pay Standards Order (COMPS) #37, which went into effect on January 1, 2021. COMPS #37, like its predecessor orders, outlined the requirements for employees to qualify for exemption from Colorado’s overtime and minimum wage requirements. Among other things, COMPS #37 clarified a point that employers had long struggled with: Colorado’s requirement that an employee “directly serve” an “executive” to qualify for the administrative exemption.
As the United States gradually emerges from the pandemic, employers (and especially those in the tech sector whose workforces can easily work remotely) are looking for ways to help frazzled and burned-out employees. In addition, many employees are seeking opportunities to preserve the flexibility they gained during pandemic remote-work arrangements. Time off, company holidays, and workday flexibility are among the top remedies for these concerns. But outmoded state and federal labor laws may impede a new era of worker freedom.
On July 15, 2021, the California Supreme Court issued a decision that will increase dramatically California employers’ potential liability for missed meal, rest, and recovery breaks. In Ferra v. Loews Hollywood Hotel, LLC, the court unanimously held that employers must pay premium payments to employees for missed meal, rest, and recovery breaks at the employee’s “regular rate of pay” instead of their base hourly rate, as many employers were doing.