Department of Labor

Tip-ping the Scales: New Challenge to the DOL’s Revised Tip Credit Rule

As was reported late last year, the Department of Labor (“DOL”) in 2018 published an Opinion Letter (FLSA2018-27), effectively rescinding the agency’s 80/20 tip credit rule. In general, the tip credit rule permits employers in tip-producing industries, such as the restaurant industry, to compensate employees at a minimum rate of $2.13 per hour, and to take a credit against the tips an employee receives. An employer is additionally responsible for the remainder of an employee’s wages, if any, between what the employee earned in wages and tips combined, and the federal minimum wage. READ MORE

Listen Up: The DOL Begins Public Listening Sessions on Its Overtime Rule

This week, the United States Department Labor (“DOL”) is conducting its first listening session on the white collar exemptions under the Fair Labor Standards Act (“FLSA”)—more commonly known as the “overtime rule.” Several additional listening sessions will take place later this month. The sessions are expected to focus on public opinion regarding changing the current minimum salary level for exempt employees from its current level of $455 per week ($23,660 annually). There is no fee to attend a session, but registration is required here.

These sessions are just the latest in the ongoing saga over revisions to the overtime rule that began two years ago in September 2016, when twenty-two states and dozens of business groups challenged the Obama administration’s overtime regulation revisions that were finalized earlier that year. The new rule was set to implement several changes, most notably raising the minimum salary level for exempt employees to $913 per week ($47,476 annually), effective December 1, 2016. Before the new rule could take effect, the Texas federal judge hearing the case issued a nationwide injunction preventing the DOL from implementing and enforcing it, based partially on a holding that the new rule exceeded Congress’s delegation of authority to the DOL. The Obama administration appealed, and after requesting additional time to respond, the Trump administration decided to uphold the position that the DOL had the authority to revise the applicable salary level. However, in July 2017, the DOL also issued a Request for Information (“RFI”) on the overtime rule, asking for the public to submit comments by the end of September. The following month, the district court judge granted the states’ and business groups’ motions for summary judgment, invalidating the regulation. The DOL decided to dismiss its appeal and instead to pursue its own regulatory rulemaking process.

The RFI asked broad ranging questions related not only to the salary level, but to other exemption-related requirements, such as the duties test. It elicited over 140,000 public comments, including from major representative and advocacy organizations such as the United States Chamber of Commerce and Independent Sector (representing the nonprofit sector). The Chamber opposed only an “excessive increase,” suggesting that based on data from the Bureau of Labor Statistics, a more modest increase to a minimum salary of $612 per week ($31,824 annualized) was more appropriate. The Chamber also expressed its opposition to any change to the duties test. The Independent Sector highlighted the heavy financial burden the proposed increase would bring to the already-financially-strained nonprofit/charitable organizations nationwide. It suggested that any change be phased in to permit organizations time to adapt, and also expressed concern that any potential change to the duties test would “significantly impact the operations of charitable organizations,” asking that any change be considered through a formal rulemaking process allowing the public time to comment and review.

Last week’s announcement on the listening sessions offered our first glimpse into the DOL’s rulemaking process since the RFI period closed last year. Notably, the agenda questions focus exclusively on the salary test—a much narrower set of questions than those posed in the RFI. Listening Session participants are asked to focus on the four following issues: (1) “the appropriate salary level (or range of salary levels) above which the overtime exemptions for bona fide executive, administrative, or professional employees may apply”; (2) “[w]hat benefits and costs to employees and employers might accompany an increased salary level”; (3) “the best methodology to determine an updated salary level”; and (4) whether the DOL should “more regularly update the standard salary level and the total-annual-compensation level for highly compensated employees.” Noticeably absent is any indication that DOL is considering automatic inflationary updating to the salary level test. This reverts back to the position in the Bush DOL that the Department did not have statutory authority to implement automatic updating. In any event, this suggests that the DOL is shying away from changes to the duties test or other more expansive revisions as the formal rulemaking process rarely expands beyond the scope of the informal information gathering. The answer will have to wait until the Notice of Proposed Rulemaking is released, which is expected in January, at the earliest.

OFCCP Director’s Departure Should Not Change Agency’s Priorities

OFCCP recently lost Trump-appointed Director Ondray Harris due to his resignation. Deputy Director Craig Leen takes Harris’s place in the interim. Harris’s departure raises some important questions that covered federal contractors may be asking.

What was Harris able to accomplish during his short tenure?  During Harris’s time at the Agency, there were few policy developments. The Agency extended the moratorium on audits for many health care providers who offer medical coverage under the military’s TRICARE program. In addition, the Agency made good on its promise to provide contractors with additional transparency by (1) publishing its scheduling methodology; and (2) releasing a guidance document titled “What Contractors Can Expect” that stresses good behavior by the Agency and its staff. READ MORE

Auto Dealership Sells Supreme Court on Service Advisor OT Exemption

On Monday, the U.S. Supreme Court ruled that service advisers at car dealerships are exempt from the Fair Labor Standards Act (FLSA).  In Encino Motorcars v. Navarro, the majority, Chief Justice John Roberts and Justices Clarence Thomas, Anthony Kennedy, Samuel Alito, and Neil Gorsuch voted to overturn the Ninth Circuit’s ruling on this exemption a second time, deciding that service advisors are “salesm[e]n . . . primarily engaged in . . . servicing automobiles,” and thus are exempt from overtime pay.  READ MORE

Joint Responsibility: Companies Should Keep an Eye on the Shifting Legal Landscape of Joint Employment

As Congress considers a bill to change the definition of joint employment under two federal statutes, the Supreme Court is poised to decide whether to take up the issue under the Fair Labor Standards Act, the U.S. Department of Labor has withdrawn administrative guidance issued by the prior administration, and several states have enacted or considered joint employment legislation.  In this rapidly evolving legal landscape, companies may want to keep a close eye on a doctrine that can lead to unexpected legal exposure. READ MORE

Another One Bites the Dust: DOL Rescinds Obama’s Persuader Regulations

Collective bargaining- boss and worker with thumbs up and down Another One Bites the Dust: DOL Rescinds Obama’s Persuader Regulations

Earlier this month, the United States Department of Labor (“DOL”) announced its intent to rescind the Obama-era regulations regarding persuader activity and reporting requirements pursuant to Section 203(c) of the Labor-Management Reporting and Disclosure Act (“LMRDA”).  Under the Obama administration, persuader activity was considered activity by anyone engaged to help management discourage employees from forming or joining a labor union, including lawyers hired to advise management on how to discourage union organizing activity. The official rescission of the Rule was published in the Federal Register on June 12, 2017.

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President Trump Says “Not So Fast” — The Future of Overtime, Fiduciary, and Pay Reporting Rules Remains Uncertain Under the Trump Administration

On January 20, 2017, shortly after Donald Trump became the 45th President of the United States, his Chief of Staff, Reince Priebus, issued an Executive Memorandum mandating a 60-day freeze on published federal regulations that have yet to take effect to allow Trump’s appointees time to review the regulations. Although such action is fairly standard during a change of administration, the impact could be significant if certain regulations set to take effect in 2017 are delayed or ultimately replaced.  Regulations potentially affected by the 60-day freeze include the Department of Labor’s (“DOL”) overtime and fiduciary rules, and the Equal Employment Opportunity Commission’s (“EEOC”) EEO-1 pay reporting requirements. READ MORE

More Questions for Employers As DOL Appeals Preliminary Injunction of Overtime Rules

On December 1, 2016, the date that the Department of Labor regulations were set to become effective, the government filed a notice of appeal [link to http://dciconsult.com/wp-content/uploads/2016/12/DOL-appeal.pdf] of the November 22, 2016 the United States District Court for the Eastern District of Texas’s Order granting a nationwide preliminary injunction “from implementing and enforcing” the DOL’s new overtime regulations. Those regulations would have raised the minimum salary level for exempt employees from $455 per week ($23,660 annually) to $913 per week ($47,476 annually). The Court’s ruling was based, in part, on its holding that the DOL exceeded its delegated authority by changing the salary basis test at a level that was contrary to Congress’ intent that executive, administrative and professional employees be exempted from coverage of the FLSA. A full copy of the injunction order can be found here. In the wake of the Court’s ruling and now uncertain future regarding the DOL’s new overtime rules, we thought it would be helpful to provide some interim guidance on frequently asked questions we have received since the Court’s ruling.  READ MORE

Pay Raises Across the Nation? Not So Fast Say Several States and Business Groups: 21 States and 55 Business Groups Challenge New Federal Overtime Rule

On Tuesday, September 20, 2016, twenty-one states filed a complaint in federal court in Texas challenging the new overtime rule finalized by the Department of Labor (“DOL”) in May of this year.  The States seek to prevent implementation of the new rule, which is scheduled to become effective on December 1, 2016.  That same day, fifty-five business groups, including several chambers of commerce, filed a similar lawsuit in Texas federal court to block the rule.

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To Free or Not to Free: The DOL’s New Overtime Regulations May Give Employees the Ability to “Unplug”—But at What Cost?

Today, mobile technology allows many exempt employees to work remotely and perform work outside traditional working hours.  Some commentators assert that the smartphone has stretched the traditional 9-to-5 workday into a 24/7 on-call period, where employees are expected to respond to work-related communications long after they leave the office and late into the night.  The expectation that employees will be available to respond on evenings and weekends, however, has sparked pushback, causing some employees to call for more work-life separation and the ability to “unplug.”  In France, this push to unplug recently resulted in a new law that gives employees a “right to disconnect.”  Under that law, many French employers soon will be required to implement rules governing work-life balance and reasonable use of digital tools.

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