Federal Employment Law Update – January 2019
DOL Publishes Penalty Increases
Update: The penalties were published in the Federal Register on January 23, 2019 and are effective.
On January 15, 2019, the U.S. Department of Labor (DOL) released a pre-publication of its Federal Register notice with specifics about the adjustment, for inflation, of the civil monetary penalties assessed or enforced by the Department for all of the following:
- Black Lung Benefits Act (failure to secure certain payments, failure to report termination of payments, and failure to file required reports).
- Contract Work Hours and Safety Standards Act (generally).
- Employee Polygraph Protection Act (generally).
- Employee Retirement Income Security Act (§ 209(b), § 502(c), and failure to provide summary of benefits).
- Fair Labor Standards Act (generally, child labor, and home worker)
- Family and Medical Leave Act (generally).
- Federal Mine Safety & Health Act (flagrant violations, mandatory safety standard violations, failure to correct violation, failure to provide timely notification, minimum penalty for order issues, penalty conversion table, and regular assessment).
- Immigration and Nationality Act (D-1, H-1B, H-2A, and H-2B violations).
- Longshore and Harbor Workers’ Compensation Act (failure to file first report of injury, failure to report termination of payments, and retaliation).
- Migrant and Seasonal Agricultural Worker Protection Act (generally).
- Occupational Safety and Health Act (failure to abate, posting, repeated, willful, other than serious, and serious).
- Walsh-Healey Public Contracts Act (generally).
These new penalties were published in the Federal Register on January 23, 2019, are effective as of that date, and for the duration of the year.
Read the Federal Register
DOL Submits Proposed Rule to Revise Overtime Regulations
On January 17, 2019, the U.S. Department of Labor’s (DOL) Wage and Hour Division (WHD) sent notice of proposed rulemaking (NPRM) to “Define and Delimiting the Exemptions for Executive, Administrative, Professional, Outside Sales and Computer Employees.” The prior NPRM, on the Fall 2018 Unified Agenda but not enacted, stated the need for the law was to review the regulations at 29 CFR 541, which implement the exemption of bona fide executive, administrative, and professional employees from the federal Fair Labor Standards Act’s minimum wage and overtime requirements.
The Department’s NPRM is anticipated to propose an updated salary level for exemption and will seek the public’s view on the salary level and related issues. The NPRM page will be updated as the rulemaking process continues.
IRS Waives 2018 Tax Penalty
On January 16, 2019, the federal Internal Revenue Service (IRS) announced that it is waiving the estimated tax penalty for many taxpayers whose 2018 federal income tax withholding and estimated tax payments fell short of their total tax liability for the year.
The IRS is generally waiving the penalty for any taxpayer who paid at least 85 percent of their total tax liability during the year through federal income tax withholding, quarterly estimated tax payments, or a combination of the two. The usual percentage threshold is 90 percent to avoid a penalty. The waiver computation will be integrated into commercially-available tax software and reflected in the forthcoming revision of Form 2210 and instructions. This relief will assist taxpayers who were unable to properly adjust their withholding and estimated tax payments to reflect an array of changes under the Tax Cuts and Jobs Act (TCJA) enacted in December 2017.
The IRS also provides the following resources:
- Withholding Calculator.
- Notice 2019-11, Relief from Addition to Tax for Underpayment of Estimated Income Tax by an Individual.
- Publication 5307, Tax Reform: Basics for Individuals and Families.
- Publication 5318, Tax Reform: What’s New for Your Business.
The IRS will not begin processing 2018 returns until January 28, 2019. However, software companies and tax professionals will be accepting and preparing returns before that date and Free File is also now available.
Read the announcement
SCOTUS Holds Forced Arbitration Not Permitted in Independent Contractor Case
On January 15, 2019 the Supreme Court of the United States (SCOTUS) unanimously held the following in an 8 – 0 decision in New Prime Inc. v. Oliveira:
- Whether a § 1 exclusion to the Federal Arbitration Act (FAA) applies to an arbitration agreement must be decided by the court first (before it can force arbitration).
- The § 1 exclusion exempts “contracts of employment” for interstate transportation workers and independent contractors, not only employees, from the FAA which would compel arbitration.
In this case, New Prime Inc. is an interstate trucking company and Dominic Oliveira was one of its drivers. Mr. Oliveira worked under an agreement as an independent contractor with a mandatory arbitration provision. When Mr. Oliveira filed a class action alleging that New Prime denied its drivers lawful wages, New Prime asked the court to invoke its statutory authority under the FAA to compel arbitration (and thereby dismiss the class action). Mr. Oliveira countered that the court lacked authority because § 1 of the FAA excepts from coverage disputes involving “contracts of employment” of certain transportation workers. The District Court, the First Circuit, and SCOTUS agreed with Mr. Oliveira.
Read about the case
NLRB Decision in Alstate and Protected Concerted Activity
On January 11, 2019, the National Labor Relations Board (NLRB) issued its decision in Alstate Maintenance, LLC where a skycap at Kennedy International Airport alleged that he was discharged for griping to his supervisor and other skycaps about not being tipped. After termination, he filed a complaint alleging that his discharge was for engaging in protected concerted activity in violation of § 8(a)(1) of the National Labor Relations Act (NLRA).
According to the NLRB, its decision in Alstate began the process of restoring the Meyers standard. Under the Meyers standard, an activity is concerted when an employee acts, “with or on the authority of other employees, and not solely by and on behalf of the employee himself.” In Alstate, the NLRB held that even if the skycap’s remark was concerted activity, it was not “protected” concerted activity because it did not have mutual aid or protection as its purpose. The complaint was subsequently dismissed.
Read the NLRB’s decision
IRS Releases 2019 Publications
In January 2019, the federal Internal Revenue Service released the following publications for use in 2019:
- Publication 15 (2019), (Circular E), Employer’s Tax Guide
- Publication 15-A (2019), Employer’s Supplemental Tax Guide
- Publication 15-B (2019), Employer’s Tax Guide to Fringe Benefits
- Publication 80 (2019), (Circular SS), Federal Tax Guide for Employers in the U.S. Virgin Islands, Guam, American Samoa, and the Commonwealth of the Northern Mariana Islands
- Publication 509 (2019), Tax Calendars
- Publication 571 (01/2019), Tax-Sheltered Annuity Plans (403(b) Plans)
- Publication 926 (2019), Household Employer’s Tax Guide
See the publications
EEOC and Federal Shutdown
The U.S. Equal Employment Opportunity Commission (EEOC) announced that it is closed because of the federal government shutdown. During this period of federal closure, a limited number of EEOC services are available. Staff will not be available to answer questions from the public or to respond to correspondence from the public. The EEOC will accept charges that must be filed in order to preserve the rights of a claimant during a shutdown; however, these charges will not be investigated. The EEOC will not litigate in the federal courts, no Freedom of Information Act requests will be processed, and the following will be cancelled:
- Federal sector hearings.
- Decisions on federal employees’ appeals of discrimination complaints.
- Outreach and education events.
Moreover, all EEOC digital portals will be closed and will not be accessible to the public. It is unclear how the shutdown will impact the opening date for the 2018 EEO-1 filing website; however, experts anticipate a delay in its availability and that the expected March 31, 2019, deadline for 2018 EEO-1 filings will be extended. ThinkHR will continue to monitor EEOC announcements that affect employers.
Department of Labor Releases Two Opinion Letters
On December 21, 2018 the U.S. Department of Labor (DOL) released the following opinion letters:
- Determining minimum wage and overtime compliance for employees with varying average hourly rates (FLSA2018-28).
- Application of the ministerial exception to members of an egalitarian religious commune (FLSA2018-29).
The first letter, 2018-28, responds to a request for an opinion about whether a client’s compensation plan, which pays an average hourly rate that may vary from workweek to workweek, complies with the Fair Labor Standards Act (FLSA). The letter found this compensation plan did comply with the FLSA because an employee’s average hourly pay rate may vary from workweek to workweek if the employer always ensures that the average hourly pay rate exceeds the FLSA’s minimum wage requirement for all hours worked.
The second letter, 2018-29, responds to a request for an opinion about whether certain members of a religious organization — in this case individuals at a religious commune dedicated to sharing goods and food, and who do not separate work from prayer — are employees within the meaning of the Fair Labor Standards Act (FLSA). According to the DOL’s own guidance, persons such as nuns, priests, lay brothers, ministers, deacons, and other members of religious orders who serve pursuant to their religious obligation in the schools, hospitals, and other institutions operated by their church or religious orders are not employees. This is referred to as the ministerial exception and thereby renders the individual not subject to the minimum wage and overtime provisions of the FLSA. Opinion Letter 2018-29 held that the commune members were “ministers” resembling a monastic community and extended the ministerial exception. The letter went into significant detail discussing the specific facts related to the commune and clarified that:
- An entity may invoke the ministerial exception if its mission is marked by clear or obvious religious characteristics.
- The ministerial exception applies to lay members of a religious community who view work as an inextricable part of their religious communal life, which is “indivisible from prayer” and a “form of worship.”
Read the letters