Update: Federal court rules against Georgia but issues injunction barring implementation of Labor Department’s overtime rule

In September, I wrote that Georgia’s decision to join a 21-state lawsuit opposing the U.S. Department of Labor’s proposed overtime rule was based on its concern that making more state employees eligible for overtime would have a significant effect on Georgia’s budget.

On November 22, 2016, Federal Judge Amos Mazzant issued an injunction preventing the December 1, 2016, implementation of the rule.

Interestingly, Judge Mazzant ruled against the argument put forward by Georgia that “FLSA’s overtime requirements violate the Constitution by regulating the States and coercing them to adopt wage policy choices that adversely affect the States’ priorities, budgets, and services.”

Instead he found that the Fair Labor Standards Act did apply to states.

The judge issued the nationwide injunction after finding that the “Department exceeds its delegated authority and ignores Congress’s intent by raising the minimum salary level such that it supplants the duties test.”

Under FLSA, employees who may be exempt from the overtime provisions of the FLSA must meet both a “duties test” to determine whether they perform duties of an executive, administrative, or professional manner, and a salary test.

In his decision, Judge Mazzant writes: “it is clear Congress intended the EAP exemption to apply to employees doing actual executive, administrative, and professional duties. In other words, Congress defined the EAP exemption with regard to duties, which does not include a minimum salary level.”

It is now up to the Labor Department to decide whether they wish to appeal the District Court’s ruling to the Fifth Circuit Court of Appeals located in New Orleans.

Complicating this matter is the upcoming change in administrations. Given the time constraints, any appeal to the Circuit Court of Appeals, and perhaps later to the Supreme Court, would have to be handled by the incoming administration; and it is unclear whether the new administration would be willing to undertake such an appeal.

In the meantime, Georgia is no longer required to reclassify state employees who would have become nonexempt under the proposed rule, and they do not have to raise their budget to cover the additional costs that might have been incurred with the rule change.

You can read the judge’s decision here.

You can read my original article on the subject here.

See you in court: New overtime rule means more litigation for Georgia employers

With the new overtime rule effective December 1, 2016, more Georgia employers can expect to be facing their employees and former employees in court.

The new rule raises the minimum salary threshold for exemption from overtime pay from the current $455/week to $913/week ($47,476 per year) and automatically increases the threshold every three years based on wage growth over time.

In Georgia, overtime rules are enforced by the Wage and Hour Division of the U.S. Department of Labor. The agency has the authority to order back wage payments and impose fines for employers who violate the law, but the agency is already dealing with a backlog of complaints and the new rule will only add to their burden of cases.

As a result, more employees and former employees will be turning to private employment attorneys to defend their rights in court.

For companies, this will mean spending substantial amount of time in court defending their job classification systems.

As Atlanta television station WXIA-TV recently discovered when reporting on a story involving a local restaurant, the agency is already struggling to enforce the existing law, and the new rule will simply add to their current backlog.

The television station found that since 2000 Georgia companies did not pay 89,766 employees more than $62 million.

While WHD can impose fines, it is highly unusual, as the television reporter found that of the 6,582 Georgia companies cited by USDOL for wage theft, only 8 percent were required to pay a fine.

The new rule will especially impact employees currently classified as first-level supervisors in low-wage industries such as restaurants and retailing where supervisory duties are mixed with directly dealing with customers.

Filing a lawsuit has always been an option under the Fair Labor Standards Act (FLSA), but with the Wage and Hour Division’s failure to keep up with complaints, it is increasingly likely that civil lawsuits will become preferable to waiting months for an investigation.

A successful lawsuit for back wages can run into $100,000's or more, as employers who lose in court will have to immediately pay both back wages and attorney fees for both sides, not to mention any appeals process.

In comparison, normally the Labor Department is satisfied to see back wages paid, sometimes setting up a payment plan where employers can pay in installments until their obligations are met.

With a potential avalanche of lawsuits facing Georgia companies, many of which are small and medium size employers without in-house legal staff, companies may learn that an administrative investigation by the U.S. Department of Labor is preferable to spending hundreds of hours in court and spending thousands of dollars defending their positions.

If you are one of the 89,766 employees or former employees who thinks you may be owed back wages collected by the U.S. Department of Labor's Wage and Hour Division, you can search their database at http://webapps.dol.gov/wow/ by the employer's name and submit a claim.

Time for Georgia to take a positive approach to labor development

Low wages, pay equity, public assistance, and drug use are related issues for Georgia.

This month, a series of reports have been published concerning Georgia’s labor force, most of them negative. The UC Berkeley Center for Labor Research and Education published a study titled “Producing Poverty: The Public Cost of Low-Wage Production Jobs in Manufacturing”. 

In it they found that 47 percent of production workers in manufacturing and temporary services relied on some form of public assistance:

	Earned Income Tax Credit	Medicaid/CHIP	Food Stamps	TANF	Total Participation
Georgia	39%	15%	22%	1%	47%

(Some workers participate in more than one public assistance program.)

The study also provides an explanation for these high rates of public assistance. “Historically, blue collar jobs in manufacturing provided opportunities for workers without a college education to earn a decent living. For many manufacturing jobs, this is no longer true. While employment in manufacturing has started to grow again following the great recession, the new production jobs created are less likely to be union and more likely to pay low wages. When jobs do not pay enough for workers to meet their basic needs, they rely on public assistance programs to fill the gaps,” according to the report.

This past Tuesday, the U.S. Department of Labor issued its new rules for overtime. In a map accompanying the announcement, USDOL indicated that the updated protections would extend protections for an additional 158,000 workers in Georgia. This in a state where 4.4 percent of workers were already at or below the minimum wage, a figure much higher than the national average.

The American Association of University Women published a study showing the median earnings for men and women across the nation. In Georgia, the gap was widest in Congressional Districts 6 (Price, R-GA) and 11 (Loudermilk, R-GA). In the 6th Congressional District, women earned on average 27.4 percent less than men. In the 11th Congressional District, the difference was 25.8 percent. This compares to a 21 percent gap nationally.

Georgia Congressional Districts with widest earnings gaps between men and women (2014)

Member of Congress	District	Earnings Ratio
Price (Republican)	GA-6	72.6%
Loudermilk (Republican)	GA-11	74.2%
Scott, A. (Republican)	GA-8	75.6%
Westmorland (Republican)	GA-3	76.3%
Hice (Republican)	GA-10	77.0%

As it happens, the two Congressional districts are side-by-side, with the 6^th District including much of the northern suburbs of Atlanta including portions of Cobb, Fulton, and Dekalb counties. The 11^th District is located in the northwestern part of the Atlanta metro area and includes Cartersville, Marietta, and Woodstock proving that the worse problems were not just in the traditionally rural parts of South Georgia.

Finally, The New York Times published a story this week on “Hiring Hurdle: Finding Workers Who Can Pass a Drug Test.” In the story, Georgia officials and company managers were dismayed to find that companies in Georgia are having trouble finding workers due to the number who fail company drug tests.

Taken individually, the stories can be read as a series of “what’s wrong with Georgia”, but they should not be read as unrelated issues.

Low wages, low rates of unionization (only 4 percent of workers in Georgia are members of unions), and significant problems in pay equity between men and women feed on each other. The results show up as social problems including greater need for public assistance and greater drug use.

Georgia has done an excellent job of luring companies, and most recently the film industry, to the state. Now they need to commit to raising their labor force, not by creating more rules and barriers but by taking a positive approach to developing its workforce by supporting efforts at great pay equity and higher wages for both men and women even if that means taking a less confrontational approach towards unions. 

The same positive approach Georgia officials take to economic development should be applied to labor development.

Effects of Department of Labor's overtime plan more dramatic in Georgia

A new analysis conducted for the National Retail Federation shows that new rules on overtime proposed by the U.S. Department of Labor would particularly affect management and professional employees in low-wage states and in rural areas where income and the cost of living are lower than the national average.

The Athens Banner-Herald is reporting that under the proposal, most individuals making up to $970 a week anywhere in the country would automatically receive overtime pay at time-and-a-half when working more than 40 hours a week, up from the current $455. The Labor Department chose $970 under a formula intended to give overtime to the lowest-paid 40 percent of full-time workers nationwide who currently receive a fixed salary.

But in 10 states – Alabama, Georgia, Hawaii, Idaho, Kentucky, Nevada, North Dakota, South Carolina, South Dakota and Texas – that dollar figure would bring at least 45 percent of full-time salaried workers under overtime rules. Another eight states – Arkansas, Florida, Louisiana, Mississippi, North Carolina, Oklahoma, Tennessee and West Virginia – would see at least 50 percent covered. The figure works out to the intended 40 percent in only one state, Maine.

The salary threshold would also be indexed, raising it to $1,400 by 2017 under one option proposed by the Labor Department. Within three years, only 22 percent of current salaried workers would remain exempt from overtime.

“This proposal has been spun as a way to raise the income of struggling workers but there are places where bankers or stockbrokers could be turned into hourly workers,” NRF Senior Vice President for Government Relations David French said. “The Labor Department has ignored the fact that the cost-of-living varies throughout the country.”

CWA bargaining with AT&T continues

Bargaining between AT&T Southeast and the Communications Workers of America (CWA) continues after their contract expired on Aug. 1.

Informational picketing is occurring at various sites around the Southeast including in Louisiana and Georgia.

This past Saturday, CWA scheduled an informational picket and rally at AT&T building in Midtown Atlanta.

CWA is reporting that AT&T "continues to insist on open-ended hiring of temporary workers and cuts in healthcare and retirement security. The company has not responded to workers' concerns about excessive amounts of forced overtime hours that make meeting family and personal needs extremely difficult, if not impossible."

Read more at: http://www.cwa-union.org/