DOL FINAL OVERTIME RULE DELAYED

A federal judge has blocked the Department of Labor from implementing and enforcing a final rule that would have raised the minimum salary required to be classified as exempt from overtime under the Fair Labor Standards Act (FLSA). This means the rule has been delayed and will not go into effect on December 1, 2016 as expected. Instead, the minimum salary required for the administrative, professional, and executive exemptions will remain at $455 per week pending a final decision in the case.

Background:

On May 18, 2016, the Department of Labor published a final rule that, among other things, would have raised the minimum salary for the administrative, professional and executive exemptions from $455 per week to $913 per week. The minimum salary increase was scheduled to take effect December 1, 2016.

Preliminary Injunction:

On November 22, 2016, a United States District Court Judge in Texas granted a request by 21 states and several business groups to temporarily block the rule from taking effect. Therefore, the minimum salary for the administrative, professional, and executive exemptions will remain at $455 per week at least temporarily.

The delay is temporary while the case continues to be litigated and the court determines whether the DOL had the authority to make the FLSA changes and whether they are valid. The delay applies to employers nationwide.

The court’s preliminary ruling delays the effective date of the FLSA changes until the court makes a final decision. Therefore, the rule did not go into effect on December 1, 2016, but the final rule could still become effective in the future. Employers should watch for updates on the case as it makes its way through the court process and continue to check the Department of Labor website for further updates.

On December 1, 2016, the Department of Labor filed a notice of appeal with the federal court. Pending the outcome of that appeal, the preliminary injunction remains in place.

If you have employees properly classified as exempt under the existing regulations (they meet all of the exemption tests, including the performance of applicable job duties and the current salary threshold of $455/week), you have the option of not making any changes. While this may be an option, there is also some risk that the rule could become effective in the future and be applied retroactively. For this reason, while the case is still being litigated, consider tracking the hours of employees who stay classified as exempt but who will have a salary that falls below $913 per week (or limit their hours to 40 or fewer per week). Consult your legal counsel to discuss your options.

If you’ve already notified an employee of a salary increase or reclassification effective December 1 or have already made the change, it may be too difficult to reverse that change or communicate that the change will not be made. For example, there may be employee relations implications if a salary increase were reversed. As mentioned above, there is also some risk that the rule could become effective in the future and be applied retroactively. If you do decide to reverse a salary increase or delay implementing one already announced, consider tracking the exempt employee’s hours (or limiting their hours to 40 or fewer per week) in case the rule becomes effective in the future and is applied retroactively.  Additionally, keep in mind that applicable state laws may require advance notice of any changes in pay and state laws may also govern the overtime exempt status of employees. Employers should consult their legal counsel to discuss options available before making and communicating decisions related to this latest development.

WFB LEGAL CONSULTING, INC.–A BEST ASSET PROTECTION Services Group

LAWYER for BUSINESS

HOW DO I KNOW IF I AM AN EMPLOYEE OR INDEPENDENT CONTRACTOR?

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There is no set definition of the term “independent contractor” and as such, one must look to the interpretations of the courts and enforcement agencies to decide if in a particular situation a worker is an employee or independent contractor. In handling a matter where employment status is an issue, that is, employee or independent contractor, California starts with the presumption that the worker is an employee. Labor Code Section 3357.  This is a rebuttable presumption however, and the actual determination of whether a worker is an employee or independent contractor depends upon several factors, all of which must be considered, and none of which is controlling by itself. Consequently, it is necessary to closely examine the facts of each service relationship and then apply the law to those facts.

For most matters before the Division of Labor Standards Enforcement (DLSE), depending on the remedial nature of the legislation at issue, this means applying the “multi-factor” or the “economic realities” test adopted by the California Supreme Court in the case of S. G. Borello & Sons, Inc. v Dept. of Industrial Relations (1989) 48 Cal.3d 341. In applying the economic realities test, the most significant factor to be considered is whether the person to whom service is rendered (the employer or principal) has control or the right to control the worker both as to the work done and the manner and means in which it is performed. Additional factors that may be considered depending on the issue involved are:

  1. Whether the person performing services is engaged in an occupation or business distinct from that of the principal;
  2. Whether the work is a part of the regular business of the principal or alleged employer;
  3. Whether the principal or the worker supplies the instrumentalities, tools, and the place for the person doing the work;
  4. The alleged employee’s investment in the equipment or materials required by his or her task or his or her employment of helpers;
  5. Whether the service rendered requires a special skill;
  6. The kind of occupation, regarding whether, in the locality, the work is usually done under the direction of the principal or by a specialist without supervision;
  7. The alleged employee’s opportunity for profit or loss depending on his or her managerial skill;
  8. The length of time for which the services are to be performed;
  9. The degree of permanence of the working relationship;
  10. The method of payment, whether by time or by the job; and
  11. Whether the parties believe they are creating an employer-employee relationship may have some bearing on the question, but is not determinative since this is a question of law based on objective tests.

Even where there is an absence of control over work details, an employer-employee relationship will be found if (1) the principal retains pervasive control over the operation (2) the worker’s duties are an integral part of the operation, and (3) the nature of the work makes detailed control unnecessary. (Yellow Cab Cooperative v. Workers Compensation Appeals Board (1991) 226 Cal.App.3d 1288)

Other points to remember in determining whether a worker is an employee or independent contractor are that the existence of a written agreement purporting to establish an independent contractor relationship is not determinative (Borello, at 349), and the fact that a worker is issued a 1099 form rather than a W-2 form is also not determinative with respect to independent contractor status. (Toyota Motor Sales v. Superior Court (1990) 220 Cal.App.3d 864, 877)

LAWYER FOR BUSINESS: WFB LEGAL CONSULTING, INC.—A BEST ASSET PROTECTION SERVICES GROUP

SIMPLE “FEHA” DISTINCTION BETWEEN RACE HARASSMENT v. DISCRIMINATION

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To prove a violation of FEHA (Fair Employment and Housing Administration Act) for race discrimination (Ca. Gov’t. Code §12940(a)), you have to prove that you suffered an adverse employment action because of your race and that you suffered damages therefrom.

Alternatively, to prove a violation of FEHA for race harassment, (Ca. Gov’t. Code §12940(j)(1)), you have to prove that you experienced severe or pervasive conduct or comments based on your race that changed the fundamental nature of the workplace environment, rendering it hostile to you based on your race.

Conceivably you could have damages for harassment while working and other damages arising out of the adverse employment action, such as a termination for example.

5 HOT TAX DEDUCTIONS TO CONSIDER BEFORE YOU FILE

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As all small business owners know, this is a critical time of year to try and dig up all the expenses we can from last year in order to drive down our tax bill as low as possible.

1. Travel related expenses.  In my opinion, this is one of the most underutilized tax deductions by small business owners today.  Unlike meals and entertainment that are limited by 50%, travel expenses are 100% deductible.  These include airfare, hotel, rental cars, valet, taxi, trains, tolls, etc…  You would be shocked to know how many tax returns come across my desk every year of new clients with literally zero travel deductions.  Consider all of your travels last year that may have involved a meeting with a client, a vendor,  or a training meeting, a tour of a competitor’s facility or store, your annual board of directors, shareholder, manager or member meeting, a conference with retreat with a partner, the list goes on and on.  It just doesn’t make sense for any business owner to not have some travel expenses.

2. Auto Deductions.  Remember this isn’t travel, but expenses for your car or truck used in your business.  There are two main options:  mileage or actual expenses, and statistics show that 90% of small business owners actually utilize the mileage method.  For 2014 this was 56 cents per mile.  Surprisingly, again I see many taxpayers shy away from claiming their true mileage because they are afraid of an audit.  True, you should do your best to keep a written record, but if you haven’t been extremely detailed, still utilize an estimate and take the deduction.  I would rather see my client defend the deduction than not take it at all.  As for ‘actual’ expenses, this is for those typically with large trucks or SUVs.  IF you were following my Newsletter in December you may have seen the special Bill and Extension passed by Congress that extended the 179 Depreciation deduction for trucks with a 6ft bed or greater, vans, delivery trucks and RVs.  Don’t forget this opportunity as well if you purchased a vehicle weighing more than 6,000lbs in 2014. If this was you, do your best to track down your fuel, repairs and maintenance for last year if you used the ‘actual’ method.

3. Dining and Entertainment. Again, a highly underutilized expense by small business owners and should be a healthy line item on your tax return.  Please make sure you consider all of your meals last year where you discussed business with a partner, or a potential client, vendor or strategic alliance. If you didn’t keep a receipt, still take the expense. Technically, you don’t need a receipt if it was less than $75, but you still should be able to substantiate it if necessary with a credit card or bank statement and the purpose of the meeting.  Another overlooked fact is that you can write-off dining by yourself when you are traveling.  This has been defined as outside of a normal commute of your home office or place of business and business owners should be diligent in tracking these expenses.  However remember, although you are traveling, all dining and entertainment is still limited to 50% of the full amount. The biggest deduction for food that is for 100% of the cost is that of event food (or otherwise stated, food purchased for your attendees at a presentation you make).  This also includes food purchased for your employees at the office.

4. Office Supplies and Technology.  Every small business owner is regularly buying supplies and upgrading their phone, computers and digital reading devices.  Don’t forget that when you have a small business, the majority of these items can be fully expensed.  Make sure you track them and discuss with your tax advisor which expenses for items should be reduced by some percentage for personal use if necessary.

5. Technology and Telephone.  This is obviously an ever increasing expense as small business owners utilize technology to do business nationwide, if not worldwide.  Many also don’t know that recent case law and IRS rulings allow business owners to write-off 100% of their cell phone expenses, so long as they have at least one dedicated home phone line.  Moreover, make sure to include the cell phones of your family members that work in the business alongside you and need a cell phone for their legitimate roll in the business.

Now with all of these expenses, you need to take into account your overall income, profit and the size of your operations.  Your deductions need to look realistic and common for the type of business you have.  However, if they’re legitimate and you have support, don’t be afraid to take them.  Go for it and just have your records as back up if you need them in the future to justify your expenses.

 

BEST ASSET PROTECTION AND BOTTLED BUSINESS SENSE RADIO

WFBLC Bottled Business Sense - Business in a Bottle LogoWFB Legal Consulting Inc. and the Bottle Business Sense Newsletter proudly present the launch of The Bottled Business Sense Radio Show. The show will launch June 3, 2014. More information will be made available as the show date approaches. However, the show will combine the unique features of Best Asset Protection legal principles in conjunction with the most current media marketing techniques that will grow, promote and sustain your business.

The hosts of the show will be Bill Bernard of WFB Legal Consulting Inc. and Rick Moscoso of R2 Visual Studios. Plan on tuning in to learn how you can apply all of the latest and greatest legal and marketing tools necessary to ensure the longevity of your business.

Is your business protected against the threat of malicious litigation and frivolous lawsuits?  Are you sinking company profits into marketing campaigns that do nothing to contribute to the growth of your business?

The Bottled Business Sense Show will provide practical business perspectives that uniquely emphasize both legal and media marketing strategies to protect and insure the longevity of your business. 

Whether you’re trying to provide a startup business with some level of stability, or an established business with fool-proof asset and estate protection, or simply attempting to get a better return for your business marketing dollars, Bill Bernard and Rick Moscoso will expose potential pitfalls to insure the security and growth of your business, free from unwanted expense and the threat of litigation.

You’ll learn how to implement marketing and protection tools equal to those used by today’s most successful corporations.