C O U N S E L O R ’ S C O R N E R WAGE & HOUR UPDATE: THREE THINGS TO KNOW BY ERIN SCHROEDER, KOLEY JESSEN IT WAS A BUSY YEAR FOR LABOR AND EMPLOYMENT lawmakers. The U.S. Department of Labor (DOL) continues to roll back regulations, such as the independent contractor rule, implemented by the prior administration. The DOL promised to revisit the Fair Labor Standards Act (FLSA) regulations as well, announcing a Notice of Proposed Rulemaking (NPRM) in its spring regulatory agenda for 2022. The anticipated NPRM could potentially increase the minimum salary for exempt white-collar workers for the first time in nearly three years. Meanwhile, state and local lawmakers have set their sights on pay transparency. The mandatory publication of compensation ranges in job postings is intended to close the wage gap that impacts women and minorities. With the prevalence of remote work in a post-COVID world, many businesses are now relying on a workfrom-home (WFH) workforce across the nation, or even the globe. This leaves management professionals to navigate laws in places where they previously had no legal obligations. Here are three things to know about the current wage and hour updates from 2022: 1. FLSA executive, administrative, and professional employee exemption is scheduled to get a refresh. The Wage and Hour Division has not published the proposed rule yet, but this new regulation could include a change to the salary basis level (currently $684 per week, or $35,568 annualized), automatic increases to the salary basis level, or revision of the duties tests. The last major update to this regulation was in 2020, when the salary basis was raised for the first time since 2004. In 2016, the DOL increased the standard salary level from $455 weekly, or $23,660 annualized, to $913 weekly, or $47,476 annualized. Enforcement of that rule was stayed due to legal challenges. Even though enforcement of the 2016 rule stalled out, many employers raised employee salaries in anticipation of the new rule’s impact on exempt workers. Employers of exempt executive, administrative, and professional employees should stay tuned for updates, as salary or duties adjustments may be required tomaintain employees’ exempt status from the overtime requirements of the FLSA. 2. DOL seeks to leave the old independent contractor rule in 2021. The reliance on independent contractor workers, particularly in the expanding “gig economy,” has steadily increased over the past decade. The question of whether a worker is an employee or independent contractor is determined on a case-by-case basis, using a multi-factor test. That is, it did until the DOL published the 2021 Independent Contractor Rule at the very end of the Trump administration. The 2021 rule made it easier to classify a worker as an independent contractor, prescribing only two “key” factors to consider, with lesser consideration given to other, additional factors. On Oct. 13, 2022, the DOL published an NPRM to restore the old “economic realities test,” which gives equal weight to each part of the multi-factor test, making it arguably harder to classify a worker as an independent contractor. I S S U E 6 , 2 0 2 2 8 nebraska cpas
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