HR Tip: Lessons from recent SCOTUS, DOL, NLRB rulings

SCOTUS decision a wake-up call on carefully defining salary

In Helix Energy Solutions Group v. Hewitt, the Supreme Court ruled 6-3 that a former employee who was guaranteed at least $963 if he worked any amount of time in one day during the workweek and who made more than $200,000 a year was eligible for overtime pay because he was paid a daily rate. The case hinged on whether being paid at least a minimum amount per day that exceeds the threshold for exemption can count as a salary. The court ruled that the defendant company didn't pay a salary as defined under the Fair Labor Standards Act (FLSA), and therefore a highly compensated employee (HCE) was not exempt.

Employers in industries such as energy, oil, and gas, which commonly use a daily rate pay model, as well as any business that pays HCEs on a day rate, shift rate, or similar method will need to carefully review their practices. The law firm, Fisher Phillips, suggests that the safest route is to include weekly (or less frequent, such as bi-weekly or monthly) salary guarantees in compensation packages for HCEs. If employees are in a state that does not recognize an HCE exemption, payroll policies must comply with the applicable state's laws.

DOL reminds hospitality employers of overtime rules

The DOL's Wage and Hour Division investigation of two Florida restaurants with common ownership, Red Mesa Inc., operating as Red Mesa Restaurant, and Veytia Ventures LLC, operating as Red Mesa Cantina, determined that the owners failed to pay overtime to servers by not combining hours when employees worked at both restaurants throughout the work week. The agency made clear that operating restaurants with the same owners under different corporate names did not prevent liability under the FLSA.

According to the law firm, Fisher Phillips, the DOL considers several factors when determining whether two or more restaurants or hotel properties are required to pay overtime as joint employers or a single integrated enterprise.

• For joint employer relationships, the DOL looks at whether two employers share responsibility for determining the employees' essential terms and conditions of their employment. These factors include whether both entities have the authority to hire and fire employees, control work rules and assignments, and determine compensation and benefits.
• For integrated enterprises, the DOL weighs four factors: common management, the interrelation of operations, the centralized control of labor relations, and common ownership or financial control.

When rotating employees across multiple locations, it's critical to know the FLSA rules. Together with other violations, the DOL recovered nearly $200,000 in back pay and liquidated damages for 89 employees in this case.

Existing severance agreements may be illegal - NLRB

In a recent decision, McLaren Macomb, the National Labor Relations Board ("NLRB") held that the "mere proffer" of severance agreements with broad non-disparagement and confidentiality provisions in both unionized and non-union workplaces violate the National Labor Relations Act ("NLRA"). Since several Trump-era rulings permitted employers to include confidentiality provisions and non-disparagement clauses in severance pacts, it's critical to review severance agreements considering the ruling. The motive of the employer or surrounding circumstances do not impact the Board's analysis under McLaren Macomb, which examines the text of the agreement itself.

Employment law changes rapidly and understanding the nuances is daunting. Protect yourself by staying informed and seeking legal counsel when necessary.