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| Montana Administrative Register Notice 24-16-331 | No. 1 01/12/2018 | |
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BEFORE THE DEPARTMENT OF LABOR AND INDUSTRY OF THE STATE OF MONTANA
TO: All Concerned Persons
1. On February 6, 2018, at 9:00 a.m., the Department of Labor and Industry will hold a public hearing in Conference Room A & B, 1805 Prospect, Helena, Montana, to consider the proposed amendment and repeal of the above-stated rules.
2. The Department of Labor and Industry will make reasonable accommodations for persons with disabilities who wish to participate in this rulemaking process or need an alternative accessible format of this notice. If you require an accommodation, contact Department of Labor & Industry no later than 5:00 p.m. on January 31, 2018, to advise us of the nature of the accommodation that you need. Please contact Amber Carpenter, Department of Labor & Industry, PO Box 201503, Helena, Montana, 59624; telephone (406) 444-1376; fax (406) 444-7071; TDD/Montana Relay Service/etc (406) 444-0532, or e-mail [email protected].
3. The rules as proposed to be amended provide as follows, new matter underlined, deleted matter interlined:
24.16.102 (2) "Amusement or recreational area" means a location that is characterized as being, or immediately adjacent to, a destination location such as a national park, ski area, or vacation resort area. (3) "Amusement or recreational establishment" means businesses with locations at an amusement or recreational area, such as the concessionaires at amusement parks, resorts, and ski areas. The term does not include food services or hospitality establishments located in the area, other than direct concessionaires of the primary amusement or recreational area operator. (4) (5) "Establishment" refers to a distinct physical place of business rather than to an entire business or enterprise which may include several separate places of business. (6) "Independent contractor" means an individual working under an independent contractor exemption certificate provided for in 39-71-417, MCA. (7) "Nonprofit" means a nonprofit corporation as defined in Title 35, chapter 2, MCA. (8) "Organized camp" means a camp which: (a) provides a sustained experience with a creative recreational and educational opportunity in a group living setting in the outdoors; and (b) uses trained leadership and the resources of the natural surroundings to contribute to each camper's mental, physical, social, and spiritual growth. (9) "Religious or educational conference center" is a meeting center providing for religious, educational and leadership growth experiences for youth or adults. (10) "Seasonal" means seven months or less. (11) "Student" means an individual who is attending an accredited school, college or university and is employed on a part-time basis.
AUTH: 39-3-202, 39-3-403, 39-71-417, MCA IMP: 39-3-201, 39-3-401,
REASON: Reasonable necessity exists to modify this rule and implementation citation to implement modifications in statute as to seasonal camps, as well as to facilitate the repeal of ARM 24.16.6501, ARM, which was written in an archaic and non-conforming style. Reasonable necessity exists to define "independent contractor" so that the definition is in line with departmental policy and programs and to ensure compliance with and utilization of the independent contractor exemption certificate program. This definition is additionally necessary to conform with proposed modifications to ARM 24.16.7520.
24.16.211 EXECUTIVE, ADMINISTRATIVE, AND PROFESSIONAL EMPLOYEES (2) and (3) remain the same but are renumbered (1) and (2). (5) and (5)(a) remain the same but are renumbered (3) and (3)(a). (b) An electronic copy of the regulations incorporated by reference is available
AUTH: 39-3-403, MCA IMP: 39-3-401, 39-3-406, 39-3-408, MCA
REASON: Reasonable necessity exists to eliminate (1) to enhance clarity and reduce length of the administrative rules. Several of these definitions are duplicated in ARM 24.16.102, and others are duplicative of statute. Reasonable necessity exists to strike current (4) due to the amendment of 39-3-406(1)(j), MCA, to include the exemption previously unrecognized. That exemption was added to the code in House Bill 226 during the 2013 legislative session. Reasonable necessity exists to modify (5) to fix broken web links and to provide better information to the public as to where information regarding these laws can be found.
24.16.1010 TRAVEL TIME (1) through (5) remain the same. (6) (7) and (8) remain the same.
AUTH: 39-3-403, MCA
REASON: Reasonable necessity exists to strike the sentence within (6) to ensure compliance with the statutory requirement that employees be paid where they are "suffered or permitted" to work. Because there is benefit to an employer when an employee travels for work, travel time must be compensated when away from the home community. This change is in line with current enforcement practices of the department. Reasonable necessity exists to strike the catchphrase for (6) because it is archaic and no longer complies with applicable rule drafting form.
24.16.1508 TIPS OR (b) Tips are the employees' to keep and may not be used by the employer to make up any part of the employees' wage. (c) Tips may be distributed pursuant to a valid tip pool agreement. A tip pool agreement for the purpose of distribution of tips is valid only where voluntarily entered into by employees without the involvement of management. Employees must first determine whether to enter into a tip pool agreement, and if so, the details of that agreement. Where a valid tip pool agreement has been created, management may enforce the agreement. (2) A service charge includes any arbitrary fixed charge added to the customer's bill by an employer in lieu of a tip, no matter what it is labelled (i.e., service charge, setup fee, house fee, service fee, labor charge, etc.). (a) Absent a valid tip pool agreement, a service charge must be distributed equally among nonmanagement employees involved in food preparation or service, or a related service. Equal distribution must be among those workers who performed services during the particular shift or event where the service charge was earned and must be distributed on a pro rata basis. (b) A valid tip pool agreement may be created by management for the distribution of a service charge. The tip pool agreement is valid for the purpose of distribution of service charges so long as it distributes all service charge monies to nonmanagement employees. (c) A service charge may not be utilized to make up any part of an employees' wage. (3) Where tips or service charges are charged on a credit card and the employer must pay the credit card company a percentage on each sale, the employer may pay the employee the tip, less that percentage. The employer must keep records of all such deductions.
REASON: There is reasonable necessity to modify this rule to provide for clarification as to the distinctions between service charges and tips, and to acknowledge the distinction and limitations on tip pools for the purpose of tips versus tip pools for the purpose of service charges. The contours of this rule, particularly with regard to voluntariness, are further intended to ensure compliance with Oregon Rest. & Lodging Ass'n v. Perez, 2016 U.S. App. LEXIS 3119, which determined that tip pool agreements imposed by management were invalid pursuant to the Fair Labor Standards Act, and accompanying federal administrative rules. It must be noted that voluntariness of a tip pool for the sharing of tips does not require the elimination and re-creation of a new tip pool with each new employee of an entity. Instead, a pre-existing tip pool could continue with documentation that new employees have been permitted to opt-in or opt-out of the pre-existing pool. Further, employees may come together to modify or eliminate tip pool agreements for distribution of tips as they choose.
Reasonable necessity exists to create (3) to clarify existing enforcement practices, consistent with federal interpretation of credit card transaction fees, that the employer is permitted to deduct from tips and service charges the same percentage as the transaction fee. As stated in U.S. Department of Labor Fact Sheet #15, "For example, where a credit card company charges an employer 3 percent on all sales charged to its credit service, the employer may pay the tipped employee 97 percent of the tips without violating the FLSA." Reasonable necessity exists to update the authorizing and implementing statutes to clarify that these rules apply to both minimum wage and overtime statutes as well as payment of wages statutes.
24.16.7514 COMPUTATION OF TIME PERIODS (1) remains the same. (2) For the purpose of these rules, an item sent to the department (3) remains the same.
REASON: Reasonable necessity exists to modify (2) to ensure conformity between departmental programs as to timely filings, and to ensure a date certain for the filing of documents with the department.
24.16.7517 (2) An electronic mail (e-mail) filing must be by way of a Portable Document Format (.pdf) attachment to an e-mail; the submitted document will not be accepted where it is transmitted solely in the body of an e-mail.
(a) a filing must conform with all applicable rules, except that only one copy of a document need be filed by electronic mail or facsimile even when multiple copies otherwise would be required; (b) remains the same. (c)
IMP: 39-3-202, 39-3-211, 39-3-403, 39-3-407, MCA
REASON: Reasonable necessity exists to modify this rule to permit more modern filing practices, and to reduce the necessity for the filing of paper copies of documents. Reasonable necessity exists to update implementation statutes to more accurately reflect the statutes which are implemented through the promulgation of this rule.
24.16.7520 PROCEDURE FOR ISSUING WAGE CLAIM DETERMINATIONS REGARDING EMPLOYMENT STATUS OF INDEPENDENT CONTRACTOR (1) remains the same. (2) To be considered an independent contractor for wage claim purposes, the individual must hold and be working under an independent contractor exemption certificate pursuant to 39-71-417, MCA, where such is required. When an individual is not required to hold an independent contractor exemption certificate, (3) An individual required to hold and work under an independent contractor exemption certificate pursuant to 39-71-417, MCA, who does not is an employee for wage claim purposes. (3) remains the same but is renumbered (4).
AUTH: 39-3-202, 39-3-403, 39-71-417, MCA IMP: 39-3-201, 39-3-402, 39-71-417, MCA
REASON: Reasonable necessity exists to modify this rule to conform the wage and hour programs to the provisions creating the independent contractor central unit and the statutory obligations of independent contractors to hold and work under an independent contractor exemption certificate. See 39-71-417 and 39-71-418, MCA. Based on the authority of the department to interpret its statutes, in particular those listed above generally defining independent contractors, this rule stems from the department's interpretation of these laws. In addition, this change permits employers the benefits of a determination before the start of work as the working status of those it hires—whether the worker holds an ICEC or not is dispositive as to the worker's status. This determination has been dispositive for many years for purposes of workers' compensation and unemployment insurance. However, absent defined clarity and adoption of the ICEC as dispositive for independent contractor purposes for the Wage Payment Act and the Minimum Wage and Overtime Act, litigation around the common law AB test has been required. This modification simplifies and streamlines the worker status determination. Reasonable necessity exists to update the authorization and implementing statutes to reflect these changes.
24.16.7521 FILING A CLAIM (1) through (3) remain the same. (4) Wage claim forms can be obtained from the Labor Standards Bureau, Employment Relations Division, Department of Labor and Industry, either in person, by telephone, online, or by mail. The street address of the Labor Standards Bureau is 1805 Prospect Ave, Helena, Montana. The mailing address is P.O. Box (5) remains the same.
REASON: Reasonable necessity exists to update this rule to reflect the current mailing address for the Labor Standards Bureau as well as to provide notice of online access to claim filing forms. Reasonable necessity exists to update the implementation statute to be accurate as to the types of claims which may be filed pursuant to these rules—specifically including minimum wage and overtime claims.
24.16.7527 EMPLOYER RESPONSE TO CLAIM (1) and (2) remain the same. (3) To be timely, the employer's written response must be (4) In the event the employer's response contains an allegation that the wage claimant is an independent contractor, a partner, part of a joint venture, or any other employment status other than that of employee, the employment status issue will be referred to the department's Independent Contractor Central Unit for a decision pursuant to ARM 24.16.7520 (5) remains the same.
IMP: 39-3-209, 39-3-210, 39-3-407, MCA
REASON: Reasonable necessity exists to modify (3) to ensure conformity with the proposed amendment to ARM 24.16.7514 regarding the timeliness of filings and submissions to the department, and to ensure a date certain can be specified. Reasonable necessity exists to modify (4) to ensure conformity with the proposed amendments to ARM 24.16.520 regarding worker status determinations.
4. The department proposes to repeal the following rules:
24.16.2301 EMPLOYMENT OF LEARNERS
AUTH: 39-3-403, MCA IMP: 39-3-406, MCA
REASON: Reasonable necessity exists to repeal this rule due to the standard rule reviews by the department. This rule is rarely utilized, duplicative of statute, and written in a non-conforming style. As such, in the interests of simplifying, limiting, and clarifying the administrative rules of Montana, the department proposes its repeal.
24.16.6501 SEASONAL AMUSEMENT OR RECREATIONAL
AUTH: 39-3-403, MCA IMP: 39-3-404, 39-3-405, 39-3-406, MCA
REASON: Reasonable necessity exists to repeal this rule due to statutory amendments made in Senate Bill 270 during the 2015 session which altered the meaning of numerous of the terms defined herein. The rule was further presented in an outdated format. Those definitions which remain necessary to the interpretation of statute are proposed to be included in ARM 24.16.102.
24.16.6701 EMPLOYMENT OF STUDENT-LEARNERS
AUTH: 39-3-403, MCA IMP: 39-3-406, MCA
REASON: Reasonable necessity exists to repeal this rule due to standard rule reviews by the department. This rule is rarely utilized, duplicative of statute, and written in a non-conforming style. As such, in the interests of simplifying, limiting, and clarifying the administrative rules of Montana, the department proposes its repeal.
24.16.7547 APPEAL OF FORMAL HEARING
IMP: 39-3-216, MCA
REASON: Reasonable necessity exists to repeal this rule because, upon periodic review of the wage and hour rules, this rule is not utilized and is duplicative of the language and requirements of statute. Therefore, in the interest of clarifying and simplifying the administrative rules, it should be repealed.
5. Concerned persons may submit their data, views, or arguments either orally or in writing at the hearing. Written data, views, or arguments may also be submitted to: Amber Carpenter, Department of Labor and Industry, P.O. Box 201503, Helena, Montana, 59624; telephone (406) 444-1376; fax (406) 444-7071; TDD/Montana Relay Service (406) 444-0532, or e-mail [email protected], and must be received no later than 5:00 p.m., February 12, 2018.
6. The Office of Administrative Hearings, Department of Labor and Industry, has been designated to preside over and conduct this hearing.
7. The department maintains a list of interested persons who wish to receive notices of rulemaking actions proposed by this agency. Persons who wish to have their name added to the list shall make a written request that includes the name, e-mail, and mailing address of the person to receive notices and specifies for which program the person wishes to receive notices. Notices will be sent by e-mail unless a mailing preference is noted in the request. Such written request may be mailed or delivered to the contact person in 5 above or may be made by completing a request form at any rules hearing held by the department.
8. The bill sponsor contact requirements of 2-4-302, MCA, apply and have been fulfilled. The primary bill sponsors were contacted by telephone on December 1, 2017.
9. With regard to the requirements of 2-4-111, MCA, the department has determined that the proposed amendment and repeal of the above-referenced rules will not significantly and directly impact small businesses. The rule modifications proposed are clarifications and simplifications of currently existing rules. To the extent of more substantive modification, such as regarding independent contractor requirements, the rules simplify and clarify existing law and eliminate the need for potentially costly and lengthy post-hoc determination of worker status.
/s/ Mark Cadwallader /s/ Galen Hollenbaugh Mark Cadwallader Galen Hollenbaugh Rule Reviewer Commissioner Department of Labor & Industry
Certified to the Secretary of State January 2, 2018.
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