Americans spend a lot of time at work. A recent study published by Bloomberg.com, in fact, suggests that the average American works almost 25 percent more hours than the average person in Europe. The raw numbers are about 258 more hours per year which averages out to about an hour more each week day. Comparing working life between countries in an apples-to-apples comparison can be tricky when considering the increasing frequency of remote work. Yet, most people would likely agree that Americans are putting in some real hours on the job.

With a new administration coming into office, there is plenty of speculation as to how workplace laws and regulations might change. While we’re all speculating, let’s consider a long gestating Republican initiative concerning work/life balance that just might become law during a Trump presidency—a re-introduction of compensatory time into private sector workplaces.

Compensatory Time (frequently referred to as comp time) is the practice of an employer providing future paid time off in lieu of immediately paying overtime wages for hours worked over 40 in a week. So, for example, if an employee classified as non-exempt under the Fair Labor Standards Act (FLSA) were to work 45 hours in a given work week, the employer and the employee could agree under a comp time scheme that the employee could bank 7.5 hours of paid leave time for future use. Public sector employers are likely familiar with comp time, as it is a common (and lawful) practice in the public sector. However, the FLSA currently only allows private employers to use comp time under very narrow and limited circumstances.

Congressional Republicans have been pushing the concept of making comp time schemes more broadly lawful for private sector employers for quite some time now. In 2013, the Working Families Flexibility Act was introduced and passed by the U.S. House of Representatives, before dying quietly in the U.S. Senate. The bill was re-introduced in the last Congress and, as the bill’s main proponents (in both the House and the Senate) will all return for the next Congress, it is likely to be re-introduced again. In addition, since President-Elect Trump’s nominee for Secretary of Labor, Andy Puzder (a fine Clevelander!), is a long-time advocate of FLSA reform and workforce flexibility, it is not unreasonable to believe a revamped Working Families Flexibility Act would be signed by President-Elect Trump.

The most recent version of the Working Families Flexibility Act placed a cap on comp time accrual at 160 hours a year. This is a lower cap than the FLSA currently imposes on public employers (240 hours for most public employees and up to 480 hours for safety and emergency forces). The latest iteration of the bill also required cash-out of unused comp time at year’s end. It is important to note that comp time arrangements (both currently for public employees and under the Working Families Flexibility Act’s proposed terms) must be voluntary, i.e. agreed-to ahead of time in writing either between employer and employee or between employer and a representative union.

Given that work/life balance is an enduring issue in the American workplace, employers should continue to evaluate policy tools by which employees can take a breather without unduly disrupting their employers’ operations.

Other (Less-Speculative) Wage and Hour Developments.

New FLSA Overtime Rules Remained Stalled: An injunction barring the implementation of new Department of Labor (DOL) regulations raising the minimum salary level for executive, administrative, and professional employees to be treated as exempt from the FLSA’s overtime requirements has been appealed by the DOL to the U.S. Fifth Circuit Court of Appeals. The Fifth Circuit agreed to hear the DOL’s appeal on an expedited basis but not before the new Trump Administration takes office. Again, the recent nomination of Andy Puzder (an outspoken foe of the new overtime regulations) as Secretary of Labor strongly suggests that this appeal will be abandoned and that the regulations will never be implemented (at least in their current form).

Ohio Minimum Wage Increases in 2017: As we previously reported, as of January 1, 2017, Ohio’s minimum wage will increase to $8.15 per hour for regular hourly employees. The minimum wage for tipped employees will increase to $4.08 per hour. Ohio’s minimum wage is currently $8.10 per hour for regular hourly employees. The minimum wage for tipped employees is currently $4.05 per hour.

Cleveland Minimum Wage Ballot Initiative Blocked: As we also previously reported, Cleveland voters were to decide in a special election in May whether to incrementally increase the minimum wage for businesses operating in Cleveland to $15.00 an hour. However, Governor John Kasich signed a bill prohibiting municipalities from passing minimum wage ordinances different from the state’s minimum wage.

George Asimou can be reached at 216-928-2899 or gasimou@walterhav.com.

As seen in Crain’s Cleveland Business on December 08, 2016.

So here it is…yet another article on how the unexpected Trump presidency will affect business.andnbsp; This time the focus is on organized labor.

I wrote multiple articles over the past few years about how an emboldened National Labor Relations Board (NLRB) grew its reach and power under the protection of the Obama Administration.andnbsp; Naturally, we would expect the pendulum to swing in the opposite direction with a Republican president and largely Republican Congress.andnbsp; But this is no ordinary Republican president.andnbsp; And, this is no ordinary time for the NLRB.

Unlike healthcare reform which could take literally years for President-elect Trump to unravel, the impact on labor could be felt almost immediately after he is sworn in.andnbsp; Why?andnbsp; Because the terms of two NLRB board members have already expired, which means President Trump will be able to fill two of the five board seats in the near-term, subject only to the approval of his Republican Congress.andnbsp; Since one member of the existing board is Republican, that will provide a Republican majority quickly.andnbsp; In addition, the terms of the remaining three board members will expire in three years which means that, even if Trump only survives one term, he will still be in a position to have completely overhauled the NLRB.

Perhaps the most significant issue to watch is the joint and/or single employer analysis that was formulated by the NLRB in the Browning Ferris subcontracting decision. Currently, the NLRB is litigating an extension of that doctrine in the highly publicized McDonalds case which is attempting to classify the franchisees and McDonalds as either a joint or single employer. This case will not be decided by the NLRB until 2017 at best, and by then the Board deciding it is not likely to have a liberal majority. Franchisees, businesses that employ subcontractors, and businesses that employ temporary workers should pay extra attention to this issue.

Given the depth and breadth of the NLRB’s aggressive, pro-union decisions under President Obama, there is no shortage of decisions and/or rules changes that are adverse to employer interests and that may be directly in the sights of a pro-management NLRB. Among them are: the “ambush election” doctrine; the “micro unit” decision;andnbsp; a plethora of NLRB’s rulings regarding employee handbooks; the breadth of arbitration clauses; post-contract-expiration decisions; whether graduate students are employees, and the definition of supervisors.

Like most things involving the Federal government, however, many of these reversals will take time and the true impact will occur slowly.andnbsp; Under President-Elect Trump, we could also see smaller budgets for the NLRB, Equal Employment Opportunity Commission (EEOC) and the Department of Labor (DOL).andnbsp; That would mean employees would be more likely to have to file suits against employers on their own without agency support where permitted.andnbsp; Consequently, we would expect that to lead to fewer frivolous cases being filed, which is good news for employers.andnbsp; In the meantime, we can only watch to see what will happen and be ready to respond to major changes.

Marc J. Bloch is a partner in the Labor and Employment Services Group of the Cleveland-based law firm of Walter | Haverfield LLP.

On January 20, 2016, the U.S. Department of Labor’s Wage and Hour Division (“WHD”) issued guidance for businesses where two or more separate entities each have relationships with the same workers. The guidance addresses when businesses will be considered to be joint employers and, therefore, may be jointly liable for violations of the Fair Labor Standards Act (“FLSA”) which governs employer pay practices. The guidance also impacts the calculation of overtime because time worked for separate entities may be added together in order to determine the amount of hours an employee works each week, thus giving rise to potential overtime claims.

The guidance was issued in the form of an Administrator’s Interpretation (“AI”) of the law. While it does not have the force and effect of the law, it does reflect the WHD’s position on the issue. Moreover, courts often rely on the WHD’s interpretation when making rulings.

The WHD guidance addresses what it calls “horizontal” and “vertical” joint employment scenarios. WHD states that joint employment may exist when two or more employers each separately employ an employee and are sufficiently related to each other with respect to that employee. The WHD calls this type of joint employment horizontal joint employment. In this scenario, an employee may perform separate work for each employer. The focus is on the relationship between or among the two or more employers.

The second type of joint employment is what WHD refers to as a vertical joint employment. This occurs when an employee of one employer is also economically dependent on another employer. This type of joint employment typically occurs when a company has contracted for workers that are directly employed by another business. This type of relationship might be one between a contractor and general contractor or a staffing agency and the business for which it provides employees.

Defining a Horizontal Joint Employer Relationship

In determining whether there is a horizontal joint employer relationship, the guidance sets forth facts that may be relevant when analyzing the degree of the association between, and sharing of control by, potential joint employers. These factors are:

• Who owns the potential joint employers (i.e., does one employer own part or all of the other or do they have common owners);
• Do the potential joint employers have any overlapping officers, directors, executives, or managers;
• Do the potential joint employers share control over operations (e.g., hiring, firing, payroll, advertising, overhead costs);
• Are the potential joint employers’ operations intermingled (for example, is there one administrative operation for both employers, or does the same person schedule and pay the employees regardless of which employer they work for);
• Does one potential joint employer supervise the work of the other;
• Do the potential joint employers share supervisory authority for the employee;
• Do the potential joint employers treat the employees as a pool of employees available to both of them;
• Do the potential joint employers share clients or customers; and
• Are there any agreements between the potential joint employers.

The guidance provides the following as an example of what it considers to be horizontal joint employment:

An employee is employed at two locations of the same restaurant brand. The two locations are operated by separate legal entities (Employer A and Employer B). The same individual is the majority owner of both Employer A and Employer B. The managers of each restaurant share the employee between the locations and jointly coordinate the scheduling of the employee’s hours. The two employers use the same payroll processor to pay the employee, and they share supervisory authority over the employee. WHD concludes that these facts are indicative of a horizontal joint relationship between Employers A and B.

Defining a Vertical Joint Employer Relationship

The focus in vertical joint employment cases is whether one employer is economically dependent on the other employer. The guidance suggests that when conducting a vertical joint employment analysis, WHD will rely on the economic realities test, which includes an analysis of multiple factors including the following:

• Who directs, controls or supervises the work performed;
• Who controls the employment conditions;
• Whether there is a permanent or long-term relationship;
• Whether the work is repetitive and rote (rote, repetitive and unskilled work indicates economic dependence);
• Whether the employee’s work is an integral part of the potential joint employer’s business;
• Whether the work is performed on the premises of the potential joint employer; and
• Whether the potential joint employer performs administrative functions such as payroll and workers’ compensation insurance, providing necessary facilities and safety equipment, tools and materials.

WHD provides the following example of what it contends is a vertical joint employer relationship:

A laborer is employed by Company A, which is an independent subcontractor to Company B. Company A was engaged to provide drywall for the project. Company A hires and pays the laborer. Company B provides the training on the project, the necessary equipment and materials, workers’ compensation insurance, and is responsible for the health and safety of the worker. Company B also reserves the right to remove the worker from the project and both companies supervise the worker. WHD contends that these facts are indicative of a vertical joint employment relationship.

In addition to providing the guidance by way of the AI, WHD issued QandAs, diagrams, and new fact sheets [ Administrator’s Interpretation; Joint Employment AI Questions and Answers; Graphical Illustration of “Vertical” Joint Employment; Graphical Illustration of “Horizontal” Joint Employment; Fact Sheet-Joint Employment Under the FLSA and MSPA; Fact Sheet: Joint Employment and Primary and Secondary Employer Responsibilities Under the FMLA.] All of these items are available at the DOL website.

Employers Need to Carefully Consider Their Relationships or Face Consequences

The bottom line – businesses that are related in any manner need to take note of this important guidance. WHD has made very clear that joint employer relationships under the FLSA should be defined broadly. While the guidance issued by WHD does not have the force of law, courts often rely on WHD’s interpretation of the law when making decisions. Equally important is the signal that WHD intends to aggressively examine joint employment relationships when conducting investigations. A mistake in this area, intentional or not, may give rise to substantial economic and other consequences. There may be liability for joint employers for overtime, liquidated damages, penalties, attorneys’ fees, and even possible criminal charges.

On June 30, 2015, the U.S. Department of Labor (“DOL”) finally issued the proposed rule which will expand overtime pay and reduce the group of employees who qualify for exemptions under the Fair Labor Standards Act (“FLSA”). You will recall that in order to qualify for a white-collar exemption under the FLSA, an employee must be paid a fixed salary that meets the minimum threshold and the employee’s primary duty must be the performance of exempt work.

The proposed rule more than doubles the salary threshold for the white-collar exemptions (executive, administrative, professional, outside sales, and computer) from $455.00 to $921.00 a week ($23,660 to $47,892 annually) with a plan to increase the $921.00 to $970.00 a week ($50,440 annually) in the final version. The thresholds would be automatically updated annually under the new rule. There is also a proposed increase in the annual exemption for highly-compensated employees, from $100,000 to $125,148, with a yearly increase thereafter that is tied to a percentile. As such, each year employers would need to modify their payrolls to ensure that employees are properly classified as exempt.

The proposed rule also addresses bonuses and incentive payments, commission payments, and exclusions for benefits.

While no specific changes are proposed, the DOL also stated that it is considering whether changes to the “duties” tests for the exemptions are needed. It is asking for comments on that issue as well.

The DOL’s rule is only a proposal at this time.andnbsp;The proposed rule was published in the Federal Register on Monday, July 6, 2015. The public, including all employers, may comment on the proposal for a period of 60 days. Comments must be filed by September 4, 2015. The DOL will then issue a final rule which is likely to include variations from the proposed rule. Keep in mind, the public may not have the opportunity to comment on these variations.

WHAT SHOULD EMPLOYERS DO NOW?

For now, employers should consider working with Chambers of Commerce, Human Resources and business organizations to review the rule and submit comments to make their concerns heard.