Apr 19, 2018
by Neil Reichenberg
America’s deficit will surpass $1 trillion per year by 2020, which is an increase in the deficit resulting from the new tax law and increased spending that was approved recently, according to the Congressional Budget Office. The annual federal deficit will increase to $804 billion in FY18. The new tax law will add $1.3 trillion to the deficit over the next 10 years and when interest on the debt is included, the tax cuts addition to the deficit will come to $1.9 trillion. The cumulative federal deficit is over $21 trillion. Interest on the debt currently consumes 7.4% of the federal budget making it the 4th largest item in the budget. It is expected to increase to 12.5% of the federal budget by 2025. The House failed recently to get the 2/3 majority needed to pass a balanced budget amendment to the US Constitution. Republicans are considering a second tax bill that would in part make the individual tax cuts that expire in 8 years permanent. If this occurred, the deficit would increase. To see the debt in real time, click on www.usdebtclock.org.
FLSA Supreme Court Decision
The US Supreme Court ruled earlier this month in the case of Encino Motorcars v. Navarro that service advisors at a car dealership are FLSA exempt employees since they are primarily engaged in sales activities. In the 5-4 decision, Justice Thomas rejected the principle that FLSA exemptions should be construed narrowly. Since the FLSA gives no textual indication that its exemptions should be construed narrowly, they should be given a “fair reading”.
FLSA Opinion Letters
The Wage and Hour Division recently released two opinion letters that deal with Family and Medical Leave Act (FMLA) related breaks and travel time.
The opinion letter request noted that an employee with a serious health condition that qualifies under the FMLA had advised of the need for a 15-minute break for every hour worked. The issue is whether these breaks are compensable, and the opinion letter concluded that they are not. The opinion states: “rest breaks up to 20 minutes in length are generally compensable because the breaks predominantly benefit the employer…The specific FMLA-protected breaks described in your letter, however, differ significantly from ordinary rest breaks commonly provided to employees. As you note in your letter, the 15-minute breaks at issue here are required eight times per day and solely due to the needs of the employee’s serious health condition as required under the FMLA. Because the FMLA-protected breaks described in your letter are given to accommodate the employee’s serious health condition, the breaks predominantly benefit the employee and are noncompensable.” The Wage and Hour division cautioned that employees who take FMLA-protected breaks must receive as many compensable rest breaks as other employees.
This opinion letter addresses the issue of travel time for employees without a fixed daily schedule. Travel time that cuts across the employee’s regular working hours is considered time worked irrespective of whether the travel occurs on a day the employee usually works. The opinion letter provides alternatives for determining compensable travel time: 1) Review the employee’s time records during the most recent month of regular employment. If the records reveal typical work hours, the employer may consider those as the normal hours going forward unless some subsequent material change in circumstances indicates the normal hours have changed. 2) If the records do not reveal any normal working hours, the employer may instead choose the average start and end times for the employee’s workdays. As another alternative, where employees truly have no normal work hours, the employer and employee (or the employee’s representatives) may negotiate and agree to a reasonable amount of time in which travel outside of employees’ home communities is compensable.
Twenty states filed a lawsuit, Texas, et al. v. United States of America, et al., alleging that the ACA is unconstitutional since the recently passed tax law eliminated the tax penalty associated with the individual mandate. The lawsuit was filed in the US District Court for the Northern District of Texas. The complaint alleges that in 2012, the US Supreme Court ruled the ACA’s individual mandate was constitutional because Congress has the power to levy taxes. With the tax penalty removed, the lawsuit contends that the individual mandate remains without any “accompanying exercise of Congress’s taxing power”. Sixteen states filed a motion recently to intervene to defend the ACA.
ADEA Amicus Brief
IPMA-HR will be joining an amicus brief in the case of Mount Lemmon Fire District v. John Guido, et al. that raises the issue of whether the twenty-employee minimum that applies to private employers under the Age Discrimination in Employment Act (ADEA) also applies to the political subdivisions of a state. In this case, John Guido & Dennis Rankin were hired in 2000 by Mount Lemmon Fire District and served as full-time firefighter captains. They were the two oldest employees when they were terminated in June 2009 and filed age discrimination charges. The Ninth Circuit concluded that the “twenty-employee minimum does not apply to a political subdivision of a state.” The Sixth, Seventh, Eighth, and Tenth Circuits have held that the twenty-employee minimum applies to political subdivisions of a state. The brief supports the Mount Lemmon Fire District. The case will be argued in the next term that will begin in October 2018.