Perspectives

Employers have a duty to engage in the interactive process when an employee requests accommodations for a disability. This collaborative process ensures that reasonable accommodations are provided, allowing employees to perform their job effectively.

Steps in the Interactive Process:

1. Acknowledge the Request

When an employee requests an accommodation for a disability, the employer must respond promptly. This step is critical not only to comply with the Americans with Disabilities Act (ADA) but also to show the employee that their request is taken seriously.

• Best Practices: Employers should have clear procedures in place for handling accommodation requests. This includes training managers and HR staff on recognizing requests, even if they are informal or don’t explicitly use the term “accommodation”. It is vital to avoid unnecessary delays, as failing to respond in a timely manner can be seen as a violation of ADA requirements.
• Legal Implications: If an employer ignores or delays a response, it may lead to claims of discrimination or non-compliance under the ADA.

2. Gather Information

Once the request has been acknowledged, the employer must gather relevant information to understand the employee’s disability and the type of accommodation needed. This step often involves open dialogue with the employee to better understand their specific limitations and job requirements.

• Best Practices: Ask open-ended questions to fully understand the employee’s situation, while being mindful of privacy and confidentiality. Involving HR, supervisors, or external experts, such as medical professionals, may help in identifying appropriate accommodations.
• Legal Considerations: Employers may request documentation about the employee’s disability from a healthcare provider, but this should be limited to confirming the need for accommodation, not an invasive inquiry into the individual’s medical condition.

3. Explore Accommodation Options

After gathering information, the employer should research and evaluate potential accommodations. Under the ADA, employers are not required to provide the exact accommodation the employee requests, but they must consider reasonable alternatives that allow the employee to perform their essential job functions.

• Best Practices: Collaborate with the employee to brainstorm accommodation options that work for both parties. Common accommodations might include modifying work schedules, restructuring job duties, or providing assistive technologies.
• Reasonableness Standard: Employers should keep in mind that accommodations are considered “reasonable” if they don’t create an undue hardship for the business. Factors like the cost of accommodation, the size of the business, and its overall resources are all considered in determining undue hardship.

4. Implement Accommodations

Once an agreement on the appropriate accommodation is reached, it’s time to implement it. This may involve making physical adjustments to the workplace, providing new equipment, or altering work schedules or duties.

Best Practices: Ensure all stakeholders, including the employee’s supervisors, are informed of the accommodation so it can be integrated smoothly. It’s important to document the accommodation process and provide any necessary training or support for the employee to effectively use the accommodation.

Potential Challenges: Sometimes accommodations require adjustments to work processes, which may cause initial disruption. Clear communication is key to minimizing confusion or frustration from both the accommodated employee and the broader team.

5. Monitor and Evaluate

After accommodations are implemented, employers must continue to monitor their effectiveness. Disabilities and job demands may evolve over time, making it crucial to check in with the employee regularly to ensure the accommodation remains suitable.

Best Practices: Set regular follow-up meetings to review how the accommodation is working and address any concerns or adjustments that may be needed. Keep communication open so that the employee feels comfortable discussing if their needs change.

Documentation: It is important to document these evaluations and any changes to the accommodation to protect the company in case of future disputes or claims of non-compliance.

By following these steps, employers can not only support employees with disabilities but also demonstrate a commitment to an inclusive and compliant workplace. The interactive process should be seen as a continual dialogue between the employer and employee, fostering collaboration to find effective solutions. Moreover, compliance with the ADA protects businesses from legal risks while promoting a positive work environment that values diversity and equal opportunity.

Developing a Robust Compliance Program Can Protect from Litigation from Internal Sources

Developing and maintaining a robust compliance program is critical for businesses to protect themselves from potential litigation arising from internal sources, such as employees or management. Understanding the importance of a comprehensive compliance program is essential to safeguarding a business’ financial and legal interests, ensuring that operations are conducted in accordance with relevant laws and regulations.

The Role of a Compliance Program

A compliance program is a structured set of policies, procedures, and practices designed to ensure that companies and their employees adhere to legal and ethical standards. A robust compliance program serves as a first line of defense against internal risks by promoting a culture of accountability and transparency within the organization. It helps prevent misconduct, detect violations early, and respond effectively to any issues that arise, thereby reducing the likelihood of litigation.

Key Components of a Robust Compliance Program

1. Clear Policies and Procedures: The foundation of any compliance program is a set of well-defined policies and procedures that outline the company’s expectations for ethical behavior and legal compliance. These should cover a wide range of areas, including workplace safety, anti-discrimination, harassment prevention, data privacy, and financial reporting. Policies should be easily accessible to all employees, written in clear language, and regularly updated to reflect changes in laws or business practices.
2. Training and Education: Regular training programs are essential to ensure that employees understand their responsibilities under the compliance program. This includes not only initial onboarding training but also ongoing education on topics such as regulatory updates, ethical conduct, and specific risks relevant to the company’s operations. Training should be tailored to different roles within the organization, ensuring that all employees, from front-line workers to senior management, are equipped to comply with applicable laws and policies.
3. Internal Reporting Mechanisms: A key aspect of a compliance program is the establishment of effective internal reporting mechanisms. Employees should have a clear and confidential way to report concerns or potential violations without fear of retaliation. This can include anonymous hotlines, secure online reporting tools, or direct access to compliance officers. Encouraging employees to report issues internally allows the organization to address problems early, before they escalate into legal disputes.
4. Monitoring and Auditing: Regular monitoring and auditing of compliance activities are crucial for detecting potential issues and ensuring that the program is being implemented effectively. This includes conducting internal audits of financial transactions, reviewing adherence to safety protocols, and assessing the effectiveness of training programs. Audits should be conducted by independent personnel or external experts to ensure objectivity and thoroughness.
5. Enforcement and Discipline: A robust compliance program must include clear enforcement mechanisms for dealing with violations. This means having a consistent and fair disciplinary process in place that holds employees accountable for misconduct. Disciplinary actions should be well-documented and applied uniformly across the organization to prevent claims of unfair treatment or discrimination, which can lead to litigation.
6. Leadership Commitment: The success of a compliance program depends heavily on the commitment of the organization’s leadership. Senior management must lead by example, demonstrating a strong commitment to ethical conduct and compliance with laws and regulations. This includes allocating sufficient resources to the compliance program, regularly communicating its importance to employees, and actively participating in compliance initiatives.

Benefits of a Robust Compliance Program

Implementing a comprehensive compliance program offers several key benefits that can protect companies from internal litigation:

• Litigation Prevention: By proactively addressing potential issues and promoting a culture of compliance, companies can prevent internal disputes from escalating into costly litigation. Employees are more likely to resolve concerns internally if they trust that the organization takes compliance seriously.
• Legal and Financial Protection: A strong compliance program helps ensure that everything operates within the bounds of the law, reducing the risk of legal violations that could result in fines, penalties, or lawsuits. This not only protects the company’s finances but also its reputation.
• Improved Employee Morale and Retention: A workplace culture that prioritizes ethical behavior and compliance fosters a positive work environment, leading to higher employee morale and retention. Employees who feel valued and respected are less likely to engage in misconduct or file lawsuits against the company.
• Enhanced Operational Efficiency: Compliance programs help streamline operations by establishing clear procedures and reducing the likelihood of disruptions caused by legal disputes or regulatory investigations.

Ongoing Maintenance and Review

A compliance program is not a one-time initiative but an ongoing process that requires regular maintenance and review. Internal teams should work closely with legal counsel and compliance officers to continually assess the program’s effectiveness and make necessary adjustments. This includes staying informed about changes in laws and regulations, updating policies and training materials, and addressing any new risks that arise.

Developing and maintaining a robust compliance program can create a solid foundation for legal and ethical operations, significantly reducing the risk of litigation from internal sources and protecting long-term success.

To ensure your compliance program is comprehensive and tailored to your company’s unique needs, the Employment and Labor group at Wagner, Falconer & Judd is here to help. Our team of experienced attorneys and HR Professionals can work with you to assess, develop, and enhance your compliance strategies, providing the legal expertise needed to protect your business from internal risks. Contact us today to take your compliance program to the next level and safeguard you from costly litigation.

On January 1, 2024, the Corporate Transparency  Act (CTA) came into effect, marking a significant step in the fight against money laundering, tax fraud, and terrorism and funding. This new law mandates the collection of beneficial owner information (BOI) for over 30 million small businesses across the United States. Here’s a breakdown of what the CTA entails and how it affects your business.

What is the Corporate Transparency Act?

The CTA is a federal law aimed at enhancing transparency in corporate ownership. By requiring a business to report information about their beneficial owners, the CTA seeks to prevent seeks to prevent illicit activities such as money laundering, tax evasion, and financing of terrorism.

Key Definitions

Reporting Company- This refers to any corporation, limited liability company, or similar entity that is created by filing a document with a secretary of state or any similar state office.

Beneficial Owner- An individual who owns at least 25% of the reporting company or has substantial control over the reporting company.

Company Applicant- The person who filed the document to create the reporting company. If multiple people were involved, it includes the person primarily responsible for directing the filing.

Reporting Requirements

Existing Companies- If your reporting company was created before January 1, 2024, you are required to provide information about your beneficial owners.

New Companies- For companies created on or after January 1, 2024, you must report information about your beneficial owners and company applicants. However, a reporting company created after January 1,2024, does not need to report its company applicants.

Identification of Company Applicants- Companies required to report must always identify at least one company applicant, but no more than two.

Filing BOI Reports

All companies subject to the CTA musts file a BOI report with the Financial Crimes Enforcement Network (FinCEN), a bureau of the U.S. Department of Treasury.

Penalties for Non-Compliance

Non-compliance with the CTA carries severe penalties:

Civil Penalty: $500 for each day the violation continues

Criminal Penalty: Up to two years of imprisonment and a fine of up to $10,000 for providing false information or failing to comply with the CTA.

Exemptions for Large Operation Companies

Some companies are exempt from the CTA requirements. To qualify for exemption, an entity must meet all the following conditions:

• employ more than 20 full-time employees in the United States
• have an operating presence at a physical office within the United States
• Filed a federal income tax return in the U.S. for the previous year showing more than $5 million in gross receipts or sales

The CTA introduces important changes for small businesses, aiming to foster greater transparency and accountability. It’s crucial for businesses to understand these new requirements and ensure compliance to avoid significant penalties. For more detailed guidance or assistance with your BOI report, please contact Wagner, Falconer & Judd.

Wage and hour compliance is an essential aspect of operating a business. It’s not just a legal obligation but a critical component of maintaining a fair and equitable workplace. Failure to comply with wage and hour laws can lead to significant financial penalties, damage to your company’s reputation and costly litigation. This post will provide an overview of wage and hour compliance, focusing on the Fair Standards Act (FLSA) and state laws like the Minnesota Fair Labor Standards Act (MFLSA).

Federal Standards: The Fair Labor Standards Act (FLSA)

The FLSA is the cornerstone of federal wage and hour regulations. It sets the baseline standards for several key areas, including:

Minimum Wage: The FLSA establishes a federal minimum wage, which is currently $7.25 per hour. However, many states, including Minnesota, have set higher minimum wages. For instance, Minnesota’s minimum wage is higher than the federal standard, and employers in Minnesota must pay the state rate. (Always be sure to review your local and state laws.)

Overtime Pay: The FLSA requires that non-exempt employees receive overtime pay at 1.5 times their regular rate for any hours worked over 40 in a workweek. This standard applies across the country, but states can impose stricter rules.

Recordkeeping: Employers are required to maintain accurate records for employee’s hours worked and wages paid. This includes details like the employee’s full name, social security number, address, birth date (if under 19), gender, occupation, time and day when workweek starts, hours worked each day, and total hours worked each week.

Youth Employment: The FLSA also sets restrictions on the employment of minors, limiting the hours they can work and the types of jobs they can perform. These provisions are designed to protect the educational opportunities of minors and prohibit their employment in jobs under conditions that may be detrimental to their well-being or health.

State-Specific Standards: The Minnesota Fair Labor Standards Act (MFLSA)

While the FLSA sets the baseline for wage and hour laws, state laws like the MFLSA can impose additional requirements. Employers must comply with both federal and state regulations and apply the standards that are most favorable to employees.

Overtime Pay: Unlike the FLSA, which requires overtime pay for hours worked over 40 in a workweek, the MFLSA mandates overtime pay for hours worked over 48 in a workweek. However, this does not mean that employers can ignore federal overtime requirements. If an employee is covered by both the FLSA and the MFLSA, the employer must pay the employee according to the standard that benefits the employee the most.

Minimum Wage: You state’s minimum wage may be higher than the federal minimum wage and vary depending on the size of the business. Employers must pay the higher state minimum wage if they are subject to both federal and state laws.

Additional State Requirements: Be aware that state’s also may have additional specific requirements. For example, Minnesota law requires meal and rest breaks, payment of wages upon termination, and protections for certain types of leave. Specifically, MN law requires that employees be given enough time to eat a meal during a shift that is eight hours or longer. Employers must be aware of the nuances to ensure full compliance. We recommend working with trusted legal counsel to ensure your follow all city, state, and federal laws.

The Importance of Compliance

The consequences of non-compliance with wage and hour laws can be severe. Employers who fail to meet these obligations may be subject to:

Back Wages: Employers may be required to pay employees any unpaid wages that were owed under law.

Liquidated Damages: In cases where violations are found to be willful, employers might be liable for liquidated damages, which can double the amount of back wages owed.

Attorney’s Fees and Court Costs: Employers found in violation may also be responsible for paying the employee’s attorney’s fees and court costs.

Reputational Damage: Beyond the financial impact, wage and hour violations can seriously damage an employer’s reputation, making it difficult to attract and retain top talent.

Staying Compliant: A Proactive Approach

Given the complexities of wage and hour laws, especially when considering both federal and state requirements, it is crucial for employers to take a proactive approach to compliance. This includes:

Regular Audits: Conduct regular audits  of your payroll practices and recordkeeping procedures to ensure compliance with all applicable laws.

Employee Training: Ensure that your HR team and management are fully trained on wage and hour laws and understand the importance of accurate recordkeeping and fair pay practices.

Staying Informed: Wage and hour laws are subject to change, so it’s important to stay informed about any updates to federal or state laws that may affect your business.

Consulting with Legal Counsel

Navigating the complexities of wage and hour laws can be challenging, especially for businesses that operate in multiple states or industries with specific regulations. To ensure compliance and protect your business from potential liabilities, it is highly recommended to work with trusted legal counsel who can provide expert advice tailored to your specific situation.

Your legal counsel can help you understand your obligations under both federal and state laws, identify potential areas of risk, and implement best practices to mitigate those risks. By partnering with experienced employment law attorneys, you can confidently navigate the complexities of wage and hour compliance, allowing you to focus on what matters most-growing your business. 

The Department of Labor (DOL) recently updated the Overtime Rule, bringing significant changes to the salary threshold for overtime exemptions. As of July 1, 2024, the threshold will increase to $844 per week, with a further increase to $1,128 per week on January 1, 2025. These changes will have wide-ranging implications for employers across the country. In this blog post, we’ll explore the historical context, financial and administrative impacts, and essential strategies for ensuring compliance with the new rule.

Historical Context and Rationale

The salary threshold for exemption has eroded over time, falling to $455 per week-currently less than the poverty threshold for a family of four. This has resulted in millions of workers working long hours without fair compensation. Between 1938 and 1975, the DOL increased the minimum salary required for the executive, administrative, and professional (EAP) exemption from overtime pay to every 5 to 9 years. However, long periods between increases after 1975 have caused the real value of the salary threshold to erode, lessening its effectiveness. 

The January 2025 salary threshold is set at the 35th percentile of earnings for full-time workers in the lowest-wage Census Region (currently the South), while the highly compensated employee (HCE) threshold is tied to the 85th percentile of earnings for full-time salaried workers nationally. Additional increases based on current wage earnings data are set to automatically occur every three years, beginning July 1, 2027.

Financial Impact

One of the most immediate concerns for employers is the financial impact of the new DOL overtime rule. With the new salary threshold increases, many employers will need to adjust their budgets to accommodate higher payroll expenses. For companies with a significant number of employees currently earning below these new thresholds, this could mean substantial increases in labor costs.

Employers will need to decide whether to raise salaries to maintain exempt status or reclassify employees as non-exempt and pay overtime wages. This decision will depend on the nature of the work, the number of hours typically worked, and the financial capacity of the business. Conducting a thorough cost-benefit analysis will be crucial to determine the most financially sound approach for your organization.

Administrative Impact

The new rule will require significant changes to payroll and HR practices. Employers will need to update payroll systems to ensure accurate tracking hours worked and proper payment of overtime for newly non-exempt employees. This may involve investing in new timekeeping software or upgrading existing systems. Additionally, HR departments may need to revise job descriptions and employment contracts to reflect changes in employment classification. Training for managers and HR personnel will be necessary to ensure compliance with the new regulations and effectively manage the reclassification process.

The administrative burden can be significant, especially for small business with limited HR resources. However, these changes are essential to ensure compliance and avoid potential legal issues.

Legal Compliance

Adhering to the new regulations is crucial to avoid penalties and potential lawsuits. Non-compliance can result in hefty fines, back pay for unpaid overtime, and legal fees. Additionally, failing to comply with the new rules can damage your company’s reputation and employee morale. Regularly auditing your payroll practices and employee classifications is important to ensure ongoing compliance. 

Consulting with legal experts and HR professionals can provide valuable guidance and help mitigate risks. Remember, staying proactive and informed is key to navigating these regulatory changes successfully.

Practical Considerations

Employers have some flexibility regarding the timing of reclassification. You can wait until January 2025 to reclassify employees if they meet the July, 2024 salary level. Planning for the reclassification process now will ensure a smooth transition. Stay informed about potential legal challenges and enjoinments to the new rule to make the best decision for your organization.

The DOL’s new Overtime Rule presents significant challenges and opportunities for employers. Assessing the financial and administrative impacts and ensuring legal compliance are crucial steps to navigate these changes successfully. By staying proactive and informed, you can make strategic decisions that benefit both your organization and your employees. 

Don’t know where to start? Integrating new legislation into your workflow shouldn’t be overwhelming. The Employment Law group at Wagner, Falconer and Judd stays up-to-date on state and federal laws so our clients can focus on running their businesses. Reach out today to learn how partnering with a firm like WFJ can provided much needed support to your organization’s leadership. 

The landscape of workplace safety inspections is evolving, with new regulations from the Occupational Safety and Health Administration (OSHA) reshaping the dynamics between employers, employees, and third-party representatives. Effective May 31, 2024, a revised rule grants employees the right to choose a representative, whether an internal colleague or an external third-party, to accompany OSHA inspectors during workplace inspections.

This significant shift is designed to bring clarity and inclusivity to the inspection process. No longer bound by formal credentials, such as safety engineering or industrial hygiene qualifications, third-party representatives can now be selected based on their knowledge, skills or experience relevant to the workplaces’ hazards and operations. The purpose is clear: to facilitate effective and thorough inspections that prioritize safety and compliance.

However, with this newfound flexibility comes a need for careful consideration and preparation on the part of employers. Understanding the implications of this rule and how to navigate them is crucial for maintaining compliance and ensuring a smooth inspection process.

Key Points in the Revised Rule:

• Expanded Representation Options: Employees now have the freedom to choose either an internal colleague or an external third-party as their representative during inspections.
• Inclusive Representation Criteria: Third-party representatives are not limited to individuals with formal credentials. Instead, their selection is based on their ability to contribute positively to the inspection through their knowledge, skills or experience.
• Compliance Officer’s Discretion: The Compliance Safety and Health Officer retains ultimate authority to determine whether a third-party representative is reasonably necessary for an effective inspection. This decision hinges on the representative’s potential contribution to the process.

Employer Response and Preparation

In anticipation of these changes, employers must revisit their policies and procedures related to OSHA inspections. This includes:

Analyzing Good Cause: Employers should be prepared to assess whether there is a legitimate argument against the presence of a third-party representative and articulate objections to the compliance officer.

Monitoring Representative Activities: Employers must ensure that third-party representatives adhere to the scope and purpose of their presence, preventing any behaviors that could disrupt or interfere with the inspection process.

Ensuring Transparency: Employers can promote transparency by staying informed about the selection process for third party representatives, potentially through active involvement in safety committees.

Addressing Union Concerns

While unions may view this rule change as an opportunity to increase organizing activities, it’s crucial to emphasize that the presence of third-party representatives is strictly for aiding in inspections. Compliance officers retain the authority to exclude individuals whose conduct disrupts the process.

OSHA’s revised rule on third-party representation in workplace inspections represents a significant step towards inclusivity and effectiveness. By empowering employees to choose representatives based on their expertise, the aim is to enhance safety and compliance standards. However, employers must be proactive in understanding and implementing these changes to ensure a smooth inspection process while maintaining a focus on workplace safety and compliance.

As employers adapt to to these changes, it’s essential to see guidance and expertise to ensure compliance while maintaining a safe working environment. If you find yourself grappling with updated regulations or need assistance in developing effective policies and procedures, we’re here to help.

On April 23, 2024, the U.S Department of Labor (DOL) issued a Final Rule raising the minimum salary thresholds for exempt employees under the Fair Labor Standards Act (FLSA). Exempt employees are (quite literally) exempt from the minimum wage, overtime, and time reporting provisions of the FLSA, allowing employers to pay these employees a weekly salary regardless of actual hours worked. The DOL sets the minimum threshold for compensation, and the positions must meet certain duties tests to be considered exempt. The Final Rule affects employees under the White Collar Exemption (executive, administrative, or professional) and Highly Compensated Employees’ Exemption.

Now and until July 1, 2024, employees occupying white collar exempt positions must be compensated at a rate of at least $684 per week ( about $35,568 per year). Similarly, employees in highly compensated positions must be compensated at a rate of at least $107,432 to qualify for the exemption.

The DOL, in its Final Rule, drastically raised these thresholds. But, potentially to soften the blow on the employers, the DOL is implementing the salary threshold increase in a two-part approach:

• First, effective on July 1, 2024, the salary level threshold for exempt employees will increase to a minimum of $844 per week (about $43,888 per year), and to $132, 964 per year for highly compensated employees.
• Then, starting on January 1, 2025, the threshold is set to increase to at least $1,128 per week (about $58,656 per year) for exempt employees and $151, 164 per year for highly compensated employees.

The Department of Labor plans on updating salary thresholds every three years beginning July, 1, 2027.

What Should Employers Do Now?

The Final Rule has already not been well received by some, and is expected to be challenged-which could delay implementation. Nevertheless, employers should proceed with caution and, despite the potential delay in the implementation, start preparing and budgeting for the changes.

• Employers could either prepare to increase employees’ salaries in a two-part approach, as the DOL suggests, first on July 1, 2024, and then again on January 1, 2025.
• Employers could also increase the salary threshold to January 1, 2025 levels on July 1, 2024.
• Employers can always convert the employees to the nonexempt status should the new thresholds be too burdensome.

As always, when it comes to exempt employees’ classification and compensation, employers should always seek experienced legal counsel. Our attorneys at Wagner, Falconer & Judd are always available to answer any of your questions.