Paid Sick Leave Trending - Chicago and Beyond

Paid sick leave laws are steadily gaining traction among states and local municipalities across the United States.  The legislation is popular for employees but poses new challenges for employers now required to comply with a patchwork of diverse legal requirements.  This summer, Chicago became the latest city to join the trend, enacting a new sick-leave law effective July 1, 2017.  Here’s what is required for Chicago employers, and what all employers should consider in developing sick-leave policies.   

The National Trend – Challenging for All Employers

California, Oregon, Massachusetts, and the District of Columbia are examples of states that have recently adopted sick leave laws.  At the same time, more than 25 local municipalities have joined the bandwagon by enacting their own versions, including New York City, Seattle, Philadelphia, and now Chicago.  Due to this mix of new municipal and state laws, other states – particularly within the South and Midwest (excluding Illinois) – have responded by passing laws preempting local paid sick leave laws, seeking to avoid a complicated patchwork of local laws burdening employers. 

FLSA Overtime Rules Finalized: U.S. Department of Labor Raises Salary Threshold for Exempt Employees

The U.S. Department of Labor recently issued new overtime rules raising the salary threshold for “exempt” employees under the Fair Labor Standards Act, as anticipated within the Obama Administration’s closing months.  The new rule doubles the minimum salary from $455 per week ($23,660 annually) to $913 per week ($47,476 annually), effective December 1, 2016.  To address these legal changes and their implications, the Evangelical Council for Financial Accountability is offering a webinar on June 23, 2016, at 12 pm Central, with attorney Sally Wagenmaker as one of the featured speakers.  For more information and to register, please visit www.ecfa.org/Events.     

Background Basics

The proper classification of employees for FLSA purposes as “exempt” or “non-exempt” is an ongoing consideration for many nonprofits.  The FLSA imposes significant requirements for non-exempt employees, including minimum hourly wage amounts, “time-and-a-half” overtime pay obligations for more than 40 hours worked per week, and accompanying record-keeping requirements. An employer’s misclassification of its employees as exempt can result in serious liability under the FLSA when an employer fails to properly pay overtime or minimum wages. 

Under the DOL’s long-standing rules, the test for exemption is threefold and based on the following: (a) type of work; (b) whether the employee is salaried; and (c) salary amount.  The new DOL rule focuses on the salary amount.  Additional background information about FLSA requirements and development of the new DOL rule is contained in our law firm’s blogs – see August 2015November 2015, and March 2016

FLSA Overtime Rules - Coming Sooner Than Expected

Nonprofit employers, be aware:  the new overtime rules developed by the Department of Labor (DOL) may be finalized very soon.  To the consternation of many employers, the proposed regulatory changes significantly increase the minimum annual salary required for an individual to be considered an “exempt employee” (i.e., not eligible for overtime) from the current $22,660 to more than double that amount at $50,440 per year.  Employers will thus need to consider making any necessary changes much sooner than originally anticipated, potentially early this summer.

As we reported last November, the DOL had stated that the new salary requirement and other related rule changes would likely not be finalized until at least late 2016.  (For background information on the proposed changes and related considerations for nonprofit employers, please see our blog from August 2015.)  The extended time frame allowed time for the DOL to sort through the staggering 270,000 public comments, many filed by concerned nonprofits that depend on dedicated employees who are willing to work long hours.  Unfortunately for these nonprofits, the DOL has abandoned this expected timeline.   

On March 14, 2016, the DOL submitted its final rule to the White House Office of Management and Budget (OMB).  The OMB has up to 90 days to review the rule, and may approve the final rule sooner, at which time the new regulations are published in the Federal Register.  The rule would not go into effect immediately, as employers are entitled to at least 60 days to comply with the new regulations.  If the OMB takes only 30 days to review the rules, they could become effective in mid-June at the earliest.