Legislative Updates

On January 8, 2021, the U.S. Department of Labor announced the following new opinion letters that provide compliance assistance related to the federal Fair Labor Standards Act (FLSA): 

• FLSA2021-1: Addressing whether account managers at a life science products manufacturer qualify for the administrative employee exemption under the FLSA. The DOL concluded that the account managers were administrative employees because they met all three requirements, discussed thoroughly in the letter, necessary to qualify for the exemption (from the FLSA minimum wage and overtime pay requirements).
• FLSA2021-2: Addressing whether the ministerial exception allows a private religious daycare and preschool to pay its teachers on a salary basis that would not otherwise conform with the requirements of the FLSA. The DOL concluded that the exception would allow the school to do so if the teachers qualify as ministers.

On January 8, 2021, the U.S. Department of Labor announced the following 2021 adjustments to the Occupational Safety and Health Administration (OSHA) civil penalty amounts:

• Serious violations: minimum of $964 per violation and maximum of $13,653 per violation.
• Other-than-serious violations: minimum of $0 per violation and maximum of $13,653 per violation.
• Willful or repeated violations: minimum of $9,639 per violation and maximum of $136,532 per violation.
• Posting requirements violations: minimum of $0 per violation and maximum of $13,653 per violation.
• Failure to abate violation: $13,653 per day unabated beyond the abatement date, which is generally limited to 30 days maximum.

These increases apply to penalties assessed after January 15, 2021.

On January 6, 2021, the U.S. Department of Labor, Wage and Hour Division announced a final rule clarifying whether an individual is an employee or an independent contractor under the Fair Labor Standards Act (FLSA). The rule:

• Reaffirms the “economic reality” test which determines whether an individual is in business for themselves (independent contractor) or is economically dependent on a potential employer for work (FLSA employee).
• Identifies and explains two core factors to determine whether a worker is economically dependent on someone else’s business (employee) or is in business for themselves (independent contractor):
• • The nature and degree of control over the work; and
  • The worker’s opportunity for profit or loss based on initiative and/or investment.

If those two primary core factors do not point to the same classification, then the rule identifies the following additional factors to determine status:

• The amount of skill required for the work;
• The degree of permanence of the working relationship between the worker and the potential employer; and
• Whether the work is part of an integrated unit of production.

The rule also:

• Identifies that the actual practice of the worker and the potential employer is more relevant than what may be contractually or theoretically possible.
• Provides six fact-specific examples applying the factors.

The rule is effective March 8, 2021.

On December 31, 2020 and January 5, 2021, the federal Internal Revenue Service released the following new forms and publications, among many others, for use in 2021:

• Form W-4 – Employee's Withholding Certificate
• Form W-4P – Withholding Certificate for Pension or Annuity Payments
• Publication 531 – Reporting Tip Income