September’s Top Employment News: Overtime and California’s Classification Law

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Oct 11, 2019

This Employment Law This Week® monthly rundown updates some of the most important employment law developments of the past month:

  • DOL issues final overtime rule
  • California codifies “ABC test” for classifying workers
  • EEOC reconsiders pay data collection beyond 2018
  • NLRB wraps up a busy summer

A full transcript of this episode follows.

1. DOL issues final overtime rule

On September 24, the US Department of Labor issued a final rule increasing the annual salary threshold for white-collar exemptions to $684 per week. Up to 10% of that amount can be in the form of commissions, non-discretionary bonuses, or other incentive compensation. For highly compensated employees, the final rule increases the annual earnings threshold to $107,432. The new thresholds will take effect January 1, 2020.

Says attorney Paul DeCamp:

“One of the big issues going into this rulemaking was whether there would be automatic increases of these salary and compensation levels. In the Obama administration’s proposed rule and final rule that ended up not going into effect, there was a provision calling for automatic updates without new rulemaking every three years. The Department considered that type of commitment in its Notice of Proposed Rulemaking that it issued in March of this year, but chose not to have automatic updating in the final rule.”

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2. California codifies “ABC test” for classifying workers

Last month, California passed legislation codifying the worker classification test established in the state supreme court’s Dynamex case. The new law goes into effect on January 1, 2020, and will likely impact a number of industries. While versions of the “ABC test” are already used in several states in some circumstances, California has set a new high-water mark, with some other states already signaling that they might follow suit.

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3. EEOC reconsiders pay data collection beyond 2018

The pay data collection story took another turn in September. After much legal wrangling, the Equal Employment Opportunity Commission (“EEOC”) is still collecting the Component 2 pay data from 2018 and 2017, which was required to be submitted by employers by September 30. But for now, the agency has announced that it does not anticipate renewing the pay data collection requirement moving forward, including for 2019 data. The agency underestimated the compliance cost of yearly submissions for employers. The EEOC plans to assess the value of the data employers filed last month before deciding whether to renew the requirement in the future.

Says attorney Robert O’Hara:

“In 2016, the EEOC decided that they were going to treat every employer the same. So, whether you have a single establishment, which requires one form to be filed, or 150 establishments, where you have 150 forms or more to file, they treated everyone the same way. That is not an accurate representation of what the filing is.”

4. NLRB wraps up a busy summer

It was a summer to remember for the National Labor Relations Board (“NLRB” or “Board”). With a Republican majority firmly in place, the Board took on a number of contested issues over the past few months. Its decisions continued the NLRB’s move away from the pro-union perspective of the Obama-era Board and, in some cases, reversed long-standing precedent.

Explains attorney RyAnn McKay Hooper:

“The general impact of the Republican-majority Board decisions is really to slant the case law in favor of employers, and the employer’s position. One major precedent that the majority impacted was the standard applied when looking at unilateral change to bargaining terms. So, historically, there’s always been the standard of ‘clear and unmistakable’ waiver. Now, the Board said, ‘You know, if there’s a management rights provision that really gave them the ability to do that, then we won’t really look at ‘clear and unmistakable’ waiver. We’ll really focus on whether there is language within the contract that really permitted the employer to do that.’ This fall, we will most likely continue to see limits placed on ability to organize and case law that favors unions.”