Articles Posted in Wage and Hour Laws

Earlier this week, Portland’s mayor signed into law minimum wage increase for workers in Portland. The minimum wage increase will go into effect in January.

The language of the law that the mayor signed could lead to tipped workers also receiving a wage increase even though some of the city’s lawmakers did not intend to give tipped workers a wage increase. When Portland’s mayor, Michael Brennan, learned that the new law would affect tipped workers, he was caught off guard. “That’s never been part of the discussions we’ve had,” Brennan said. “It was very clear that we weren’t trying to move toward increasing the financial impact on restaurants.” Since some lawmakers, including the mayor, did not intend to require increased wages for tipped workers, the Portland City Council will be considering a fix to the newly passed law that would not raise the minimum wage for tipped workers.

Portland’s decision to increase the minimum wage has sparked conversations in other Maine cities about whether they should also increase the minimum wage in their cities. This issue is perhaps no more serious than in South Portland since it borders Portland and has a lot of businesses with minimum wage workers. South Portland City Council member Tom Blake is concerned that it might be more difficult for South Portland employers to find good employees because the best workers may decide to seek employment in Portland, where the wages are higher, instead of South Portland. South Portland’s mayor, Linda Cohen, hopes that the Greater Portland Council of Governments can address the issue with a regional wage structure that will work for the whole area.

This week the President and the Secretary of Labor announced that the U.S. Department of Labor (DOL) would be updating overtime regulations so that approximately 5 million more workers would be eligible for overtime pay, including a reported 20,000 workers in Maine. The Fair Labor Standards Act (FLSA), a law originally passed in 1938 during the Roosevelt administration, requires employers to pay certain employees time-and-a-half for overtime work. The FLSA exempts certain employees from overtime requirements so that employers do not have to pay these exempt employees time-and-a-half for overtime.

One set of exemptions in FLSA are called the “white collar” exemptions which exempt certain salaried workers from overtime pay requirements. One rationale for exempting these workers was that they earned so much money that there was no need pay them overtime on top of their salaries. However, the salary threshold used to determine who can be classified as exempt have not been updated in decades.  Consequently, many exempt salaried workers often make less per hour than the hourly workers that they supervise. A so-called “white collar” worker can be exempt from overtime pay even if she earns as little as $23,660 per year, which is below the poverty line for a family of four. The DOL told the story of one of these workers when it announced the proposed updates to the regulations. This worker, a manager at a discount retail store, worked an average of 72 hours per week without any overtime pay and earned less than some of the hourly workers that he supervised.

The proposed rule changes would increase the $23,660 threshold to $50,440 per year. The new rule would also ensure that the threshold continues to rise so that it keeps pace with inflation or wage growth.

The paper mill in Bucksport, currently owned by Verso Paper, will be shutting down and hundreds of workers will be laid off.  When a closure of a workplace this size occurs in Maine, state law requires the employer to provide severance pay to laid off employees who have worked three years or more for the employer.  Each employee’s severance pay must be equal to one week of wages for every year the employee worked for the employer.  The law requires the employer to pay this severance pay “within one regular pay period after the employee’s last full day of work.”

In addition to this severance pay law, Maine also has a law which requires an employer to pay an employee the wages he has earned and the vacation time he has accrued when he separates from the employer.  The employer must provide this money to the employee within a “reasonable time” after the employee “demands” the money.  For purposes of the law, “a reasonable time means the earlier of either the next day on which employees would regularly be paid or a day not more than 2 weeks after the day on which the demand is made.”

A union who represents workers at the Bucksport mill and some of the affected workers sued Verso because they claimed Verso refused to pay severance pay and accrued vacation pay within the required time periods.  The Maine Department of Labor, Maine Attorney General, and another union have reportedly reached a settlement agreement with Verso over the payment of severance pay.  But the union who filed the lawsuit, the International Association of Machinists and Aerospace Workers, has reportedly not agreed to the settlement.  The settlement would reportedly allow Verso to pay half of the severance pay by January 8 and the rest in March. (This news report does not mention the payment of accrued vacation pay.)

In 2015, according to the National Conference of State Legislatures, the minimum wage in 24 states will increase. The federal minimum wage is currently $7.25 per hour.  In 2015, 29 states will require employers to pay more than the federal minimum wage.  Maine is one of these 29 states with a minimum wage of $7.50 per hour.

In 2014, four states approved increases to their minimum wages through ballot measures and legislatures in eleven states, as well as the District of Columbia, also approved minimum wage increases.  Another nine states have minimum wage laws that call for automatic increases to the minimum wage in 2015 based on measures of inflation.

Four of the 24 states that will see increases to their minimum wages in 2015 are Connecticut, Massachusetts, Rhode Island, and Vermont.  Their minimum wages will be: $9.15 per hour in Connecticut; $9.00 per hour in Massachusetts; $9.00 per hour in Rhode Island; and $9.15 per hour in Vermont.

The U.S. Department of Labor (DOL) recently released the results of a new study that it commissioned on minimum wage law violations in New York and California. The DOL commissioned this study because it enforces the minimum wage requirements that are in the federal Fair Labor Standards Act (FLSA).

The group that conducted the study sought to measure three things: (1) the extent of minimum wage violations in New York and California; (2) the amount of lost income stemming from those minimum wage violations; and (3) the economic impact of those violations.

The study showed that employers violate minimum wage requirements far too frequently.  In California, the study estimated that between 344,000 and 372,000 minimum wage violations occur weekly.  This translates to between $22.5 and $28.7 million in wages that California employers wrongly withheld (or, in other words, stole) from their employees every week.  In New York, the wage theft from minimum wage violations was in the $10 to $20 million range every week.  Employers in the leisure and hospitality industry are the worst offenders in both states.

The U.S. Sixth Circuit Court of Appeals considered this question earlier this month in Bacon et al. v. Eaton Corp. et al. The Bacon case involved shift supervisors who claimed that they did not receive overtime pay when they worked more than 40 hours per week.  Under the federal Fair Labor Standards Act (FLSA), employers generally must pay all employees who work more than 40 hours in a week overtime pay, which is time-and-a-half the employee’s regular rate of pay for the hours he works over 40 in a week. There are exceptions to this general rule; and one of these exceptions is for “executive” employees, which are employees who primarily perform managerial functions.

The shift supervisors in Bacon argued that, even though Eaton Corp. designated them as managers, they did not actually perform managerial functions.  The court looked to federal regulations from the U.S. Department of Labor to determine whether these shift supervisors performed managerial functions.  Under those regulations, an employer must satisfy a four-element test before it may decide not to pay a managerial employee overtime pay.  The employer must show that (1) the employee is compensated on a salary basis at a rate of not less than $455 per week; (2) the employee’s primary duty is management of the enterprise in which he is employed or of a customarily recognized department of subdivision of that enterprise; (3) the employee customarily and regularly directs the work of two or more other employees; and (4) the employee has the authority to hire or fire other employees or his suggestions and recommendations as to the hiring, firing, advancement, promotion, or any other change of status of other employees are given particular weight.

The court found that Eaton Corp. failed to establish that the shift supervisors had the authority described in the fourth element of this test.  Eaton Corp. disregarded the shift supervisors’ personnel recommendations; it provided them with no training on recruiting employees; and the shift supervisors’ job descriptions did not include decision-making regarding personnel.

The U.S. First Circuit Court of Appeals, which has jurisdiction over Maine, recently ruled in an unpaid overtime case that the defendant-employer should have included per diem payments when it calculated overtime pay.  In the case, Newman and Patague v. Advanced Technology Innovation Corp., Mr. Newman and Mr. Patague argued that Advanced Technology illegally excluded the per diem pay that it gave to them when it calculated their overtime pay.

Under the federal Fair Labor Standards Act, covered employers must pay non-exempt employees 1.5 times their “regular rate” of pay for all hours worked over 40 in a week.  This case involved the issue of what money should be included in the regular rate of pay.  This is important because the higher the regular rate of pay is, the higher the overtime pay should be.  Newman and Patague argued that the money they received as per diem, which was supposedly meant to reimburse them for traveling and other expenses they incurred while working away from home, was actually part of their wages.

Advanced Technology argued that the per diem should not be counted as wages, and not be included in the “regular rate,” because it was truly just to compensate Newman and Patague for expenses they incurred while they worked away from home.  The trial court accepted Advanced Technology’s argument and found in favor of the company but the First Circuit reversed the trial court’s decision.  The First Circuit held that the per diem was actually part of Newman’s and Patague’s wages because the per diem varied based on the number of hours they worked.  The First Circuit limited its holding, however, reasoning that per diem would not be treated as part of the “regular rate” of pay if the employer reduced it based on the number of days, instead of hours, the employee worked.  So, for instance, an employer could pay half of a normal per diem for a day if the employee was only on work travel for half a day and, if it did that, the per diem would not count as wages.

Last month, the U.S. Department of Labor announced new regulations that will require employers to pay home care workers the minimum wage and overtime pay. Home care workers provide essential home care assistance to elderly people and people with illnesses, injuries or disabilities. In 2007, Maine passed a law which provided these same types of workers with minimum wage and overtime protections. Home care workers are particularly essential in Maine since Maine is the nation’s oldest state.

Dennis Fitzgibbons, chair of the Maine State Independent Living Council, has advocated for better pay for home care workers. “All of us who live with a disability want to go on with our lives as we see fit to the greatest extent possible,” said Fitzgibbons. “While we may solicit support from families and friends, we often need professional direct care workers to assist us as well. When we enlist their services, we expect the highest quality possible, and we owe them something in return.”

These new federal regulations will go into effect on January 1, 2015. If you are a home care worker and you do not receive the minimum wage or overtime pay, you should contact an experienced employment lawyer to learn more about your rights.