DOL’s Aggressive Regulatory Agenda Continues

The U.S. Department of Labor’s (“DOL”) role as a strong player in the Obama Administration’s domestic agenda shows no signs of letting up. DOL is poised to finalize big changes in the federal contracting and wage and hour spaces. Employers should be ready to meet the compliance challenges associated with these new obligations.

The Office of Information and Regulatory Actions (“OIRA”), the regulatory arm of the Office of Management Budget (“OMB”), released the Fall 2015 Regulatory Agenda.  Publication of the regulatory agenda is important as it lists when government agencies intend to propose or finalize their rules in the next 12 months. Notably, as the Obama administration winds down, publication of the agenda gives significant insight into what the administration hopes to accomplish before the end of the term.  The anticipated dates are not binding and agencies frequently leave items on the agenda even though they may not be a high priority.

Nonetheless, the Fall 2015 release confirms that the Fair Pay and Safe Workplaces (a.k.a. the “Blacklisting” regulations) regulatory actions remain a high priority with an anticipated April 2016 publication date.  In addition, the white collar overtime regulations are moving at a quick pace with a summer 2016 publication date.

Blacklisting Regulations are Set for April 2016 Publication. The Fall agenda lists April 2016 as the publication for the final version of Fair Pay and Safe Workplaces.  As a reminder, the regulatory actions at issue here are the Federal Acquisition Regulatory Council’s regulation and the companion Department of Labor guidance which grew out of the President’s Executive Order No. 13673.  The Executive Order required that contractors with over $500,000 in federal contracts report a three-year history of their labor law violations to the contracting agencies and, if contractors are deemed not “responsible,” they face several administrative sanctions including debarment from federal contracting.  Several challenges related to this effort exist including the significant reporting burden on contractors as well as major unresolved practical issues such as the difficulties prime contractors would face in reporting for all of their multi-tiered subcontractors.

The April 2016 anticipated publication date indicates that this remains a very high priority for the Administration.  The April date also may confirm our belief that the Administration is considering the Congressional Review Act (“CRA”) in the timing of the regulation.  This 1996 law can play a role in the timing of regulations near the end of a presidential term.  It requires major rules to be submitted to and considered by Congress before they take effect.  If Congress adjourns its annual session less than 60 “legislative days” in the House of Representatives or 60 “session days” in the Senate after a rule is submitted to it, then the rule is carried over to the next session of Congress and subject to possible disapproval during that session.  Importantly, if the regulation is sent after the 60 day timeframe and the next Congress disapproves of a final regulation, the next President would be able to scuttle the regulatory action by signing the resolution of disapproval.  President Bush was able to kill the DOL’s ergonomics rule using this tool.  The April publication date may reflect concern about the CRA deadline and confirms that the blacklisting regulations are on a fast track to be implemented.

Final Overtime Regulations to Come During the Summer.  The Agenda has the Department of Labor (“DOL”) Wage and Hour Division’s White Collar regulations slated to be published in July 2016. The proposal would raise the salary test for non-exempt works to $50,440 from $23,660.  In addition, the proposal indicated a possible change to the duties test and suggested several proposed options.  It remains to be seen whether the DOL will change the duties test. However, if it does, we anticipate that it will adopt the California test which requires that employees spend at least 50 percent of their time performing the primary duty and not counting concurrently performed nonexempt work.  DOL’s refusal to extend the comment period indicates its desire to move forward with the rule quickly.  However, the July date is a little later than what we expected.  This may be a reflection of the need for the DOL to review the more than 290,000 submitted comments.  However, the summer publication date could be read that the Agency is devising strategies to change the duties test.  In any event, any change that takes effect in the third or fourth quarter of 2016 will pose a very difficult implementation burden, as employers may be required to not only audit their workers for compliance with the salary test but may be required to make a very complex assessment for workers in conjunction with a changed duties test.

No Surprises in the OFCCP Agenda.  The OFCCP Regulatory Agenda is fairly straightforward.  As expected, the amendments to the Sex Discrimination Guidelines are on the list for this month.  While the Agency extended the comment period to take into account the Supreme Court’s decision in Young v. UPS, it remains unclear whether the guidelines will go beyond incorporating current Title VII principles.  The heavy lift would have been adding sexual orientation and gender identity.  But OFCCP gained authority on these bases through the President’s recent executive action and, therefore, no need exists for the guidelines to make their mark in this regard.  The only other closely watched regulatory action is the final version of the Equal Pay Report regulation.  The proposed rule would require that contractors report their composite W-2 wages, hours worked and other pay related data to OFCCP.  The release of the final rule moved from November 2015 in the Spring agenda to May 2016 in the recent release.  This rule also garnered significant opposition from the contracting community and the continued delay may signal that this may not continue to be a high OFCCP priority.  As this gets delayed, there is a growing chance that the EEOC and the OFCCP may be considering joint efforts.  A report commissioned by the EEOC several years ago as well as the comments to the rule suggested that the agencies work together. It remains to be seen how the joint efforts will manifest themselves but it would not be surprising if EEOC begins sub-regulatory efforts to add compensation level data to the EEO-1 forms.