Minnesota: Year-End Reminders

By William E. Parker - Peters, Revnew, Kappenman & Anderson, P.A.

November 25, 2019

With the end of the year very nearly upon us, here are a few employment law changes to keep in mind as your business heads into 2020:

FLSA Overtime Changes
•    The so-called “white collar” overtime exemptions under the Fair Labor Standards Act (FLSA) are changing effective January 1, 2020.
•    To be exempt from overtime pay, an employee who meets one of the exemptions will need to earn at least $684 per week ($35,568 per year), up from $455 per week ($23,660 per year).
•    To qualify for the “highly compensated employee” exemption, the employee must now earn $107,432 per year (up from $100,000).

Sick & Safe Time Leave
•    Duluth’s sick and safe time (SST) ordinance takes effect on January 1, 2020, and applies to employers with at least five employees.
•    Any employee who is based in or spends half of his or her working hours in Duluth must accrue one hour of paid SST leave for every 50 hours worked.

Minneapolis Wage Theft Prevention Ordinance
•    This also takes effect January 1, and applies to employers based in Minneapolis or who have employees who work at least 80 hours per year in Minneapolis.
•    This is in addition to the Minnesota wage theft statute, which went into effect earlier this year, and has some additional requirements.
•    Employers must provide all employees (not just new employees) with a detailed notice, including references to Minneapolis’ SST ordinance.

Minimum Wage
•    Minnesota: effective January 1, 2020, minimum wage for large employers ($500,000 annual gross revenue or more) will increase to $10, and will increase to $8.15 for all other employers.
•    St. Paul: minimum wage for very large employers (10,000 or more employees) will increase to $12.50 effective January 1, 2020, with raises for other employers coming later in the year.

DOL Proposes Changes to FLSA “Fluctuating Workweek”; Also, End-of-Year Reminders

On November 4, 2019, the Department of Labor (DOL) proposed changes regarding the treatment of non-exempt employees who work a “fluctuating workweek” under the Fair Labor Standards Act (FLSA).  This is a method most commonly used in seasonal businesses.

Under the FLSA, employees who are not exempt from overtime but who work an irregular schedule, are paid a fixed salary, and have weeks in which they work both under and over 40 hours, can be paid half-time on overtime hours.  This allows an employer to compensate those hours at only one-half (50%) of the employee’s regular rate, rather than one and one-half times (150%) that rate.  To use the fluctuating workweek method, the following conditions must be met:  
1.    The employee’s salary must be sufficient to compensate him/her at a rate not less than minimum wage, regardless of how many hours worked, whether few or many.
2.    The employee receives a fixed salary, which does not change even if they work less than 40 hours in a given week (except where there is an unpaid leave of absence of an entire day or more due to illness).
3.    The employee’s hours fluctuate from week to week, both above and below 40 hours.
4.    The employer and employee have a clear mutual understanding that the employee will be paid a salary and overtime at half his/her regular rate, regardless of how many hours worked.
5.    The employee receives overtime pay equal to at least half his/her regular rate of pay for all hours worked over 40 hours.

Why the proposed change?  The DOL’s new proposal would reverse a 2011 rule and add language to the regulations specifically clarifying that bonus and premium payments are compatible with the fluctuating workweek method, as long as those payments are included in the employee’s regular rate for purposes of calculating overtime.  

While the prospect of paying half-time rather than time-and-a-half for overtime, can be enticing, employers are cautioned that the fluctuating workweek method is complicated with a number of potential pitfalls. Best practice requires a carefully detailed but easy-to-understand written agreement with the employee.

If you need help preparing for these changes and others entering into 2020, or if you have questions regarding the fluctuating workweek method, please contact William Parker (952-921-4602 or wparker@prkalaw.com) or any other attorney at Peters, Revnew, Kappenman & Anderson, P.A.