Don’t Halt Compliance Efforts Just Because of Legal Challenges to the New Overtime Rule

On Sept. 20, 2016, Nevada and Texas led 21 states, including the Commonwealth of Kentucky, in filing a lawsuit to challenge the Department of Labor’s (DoL’s) new overtime rule changes set to go into effect Dec. 1 of this year. Right behind them, the U.S. Chamber of Commerce, National Automobile Dealers Association, National Association of Wholesaler Distributors and other groups filed their own appeal.

justice-building

“The DoL went too far in the new overtime regulation,” said Randy Johnson, senior vice president of Labor, Immigration, and Employee Benefits for the U.S. Chamber. “We’ve heard from our members, small businesses, nonprofits, and other employers that the salary threshold is going to result in significant new labor costs and cause many disruptions in how work gets done,” Johnson said in a press release. “Furthermore, the automatic escalator provision means that employers will have to go through their reclassification analysis every three years. In combination, the new overtime rule will result in salaried professional employees being converted to hourly wages, and it will reduce workplace flexibility, remote electronic access to work, and opportunities for career advancement.”

The  Chamber Suit

  • The Chamber suit charges that the rule departs from the intent established by Congress in the Fair Labor Standards Act (FLSA) 78 years ago in that:
  • It sets an excessively high threshold for determining which positions qualify as executive, administrative, and professional.
  • The DoL “ignored regional and industry differences that have been previously acknowledged,” which results in a one-size-fits-none salary threshold.
  • The automatic triennial update “with no rulemaking or taking input from affected parties is not authorized by the Fair Labor Standards Act or any other relevant statute.”

The  States’ Suit

The states’ suit notes:

  • The new rule disregards the actual requirement of the FLSA by doubling the minimum salary threshold (from $23.660 to $47,476) that applies regardless whether an employee actually performs white-collar duties.
  • The best first indicator of white-collar exempt status is if a person in the exempt position actually performs white-collar work, not whether the salary meets the minimum.
  • The triennial salary increase based on the 40th percentile of the weekly earnings of full-time salaried workers in the lowest wage Census region. The increase “not only evades the statutory command to delimit the exception from ‘time to time,’ as well as the notice and comment requirements of the Administrative Procedure Act, it also ignores the DoL’s prior admissions [in President George W. Bush’s administration] that ‘nothing in the legislative or regulatory history…would support indexing or automatic increases.”

The new rule unconstitutionally requires states to pay overtime to state employees that are performing white-collar functions when the employees earn less than an amount to be determined by the executive branch of the federal government.

Lawsuits Can Fail

As heartening as these lawsuits may be to businesses, there is always the possibility that the lawsuits fail. Nearly since the rule was proposed, there have been experts who have predicted that the rule would be challenged in the courts.

But as Lawrence Mishel, Ph.D., economist and president of the Economic Policy Institute, a nonpartisan, Washington, D. C., think tank said in a recent interview by Society for Human Resource Management, “The DoL fulfilled all of their obligations during the rulemaking proceeding. They crossed every t and dotted every i. The final overtime pay rule update should be implemented as planned starting Dec. 1.”

With that in mind, don’t stop preparations for complying with the new overtime rule. The deadline for having everything in place will be here sooner rather than later.

Information provided by writer, Diane Faulkner, is not legal in nature. All reviews and opinions are submitted and based upon extensive research, experience in the human resources and labor relations fields and are not, in any way, legal opinions.

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Don’t Halt Compliance Efforts Just Because of Legal Challenges to the New Overtime Rule

15 Employment and Labor Resolutions for 2015, part 2 of 3

In the second part of the series of resolutions everyone should make to keep their human resource department running smoothly — and legally, we have five more entries:

 6. Audit your wage-hour compliance. Unintentional overtime and wage-hour law violations have a new name in many quarters: “wage theft.” Federal and state agencies and plaintiff’s lawyers, sometimes encouraged by labor unions and their affiliate groups, are saying “show me the money” and finding it. In addition, the U.S. Department of Labor has said that it will attempt to narrow the white-collar exemptions this year. (Although the DOL says the changes will not be drastic, they are expected to be drastic). Among other things, a good wage-hour audit will include ensuring that lower-wage employees are getting at least the applicable minimum wage; that employees are not being required or “pressured” to work off the clock, or “winked at” when they do so; that the employees classified as “exempt” really are; and that any “independent contractors” really are (see also Resolution No. 1). Be sure that the review includes compliance with applicable state and local minimum wage laws, too. Many states now have a higher minimum wage than the Fair Labor Standards Act rate.

7. Update your EEO/no-harassment policies, and get that training done! In just the past year, the EEOC has taken the position that pregnancy and related conditions (including lactation) must be reasonably accommodated. The EEOC and the Office of Federal Contract Compliance Programs, which enforces the affirmative action laws that apply to federal contractors, both agree that “gender identity” is a protected category and that discrimination based on sexual orientation or gender identity violates Title VII. Do your policies reflect this? Do your employees know the new rules? Do victims of harassment and discrimination know that they have recourse?

8. Review your use of criminal background and credit information in hiring decisions. Many state and local laws prohibit employers from asking about criminal history on employment applications, and the EEOC has taken an aggressive position on the use of criminal or credit information in making employment decisions. You can still get this information, but are you getting it properly? If you find that an individual has a criminal or credit problem, are you making the required “individualized analysis” that takes into account, among other things, the nature of the conviction, the years that have passed, and the particular position for which the individual is applying? Did you grab some “canned” rules from a website, or are your rules customized to fit your industry, your workforce, and the people you serve?

9. If you’re a federal contractor, make sure you are up to date on all of the OFCCP’s new requirements. For example, the new requirement that you prohibit discrimination or harassment based on gender identity. The new minimum wage (applicable to some, but not all, federal contractors). The new scheduling letter and itemized listing. The proposed rule prohibiting employers from requiring that employees avoid discussing their pay. The rule requiring employers to “air their dirty linen” by disclosing certain violations of federal labor and employment laws. The new rule on disability discrimination/accommodation and veterans. (“Perform compensation analysis” is another good resolution if you haven’t done one lately).

10. Make sure you’re in compliance with the new injury and illness reporting requirements under the Occupational Safety and Health Act, which took effect on January 1. (Reported on this new rule back in September).

 Check back next week for the last installment of the 15 resolutions.

Disclaimer I am not a licensed attorney. My blogs are based on my own experiences, interviews (where credited), and loads of research and do not represent legal advice.

15 Employment and Labor Resolutions for 2015, part 2 of 3

OFCCP Releases Final Rule on LGBT Non-discrimination

The Office of Federal Contract Compliance Programs announced this month that it is issuing a Final Rule that implements President Obama’s Executive Order that prohibits federal contractors from discriminating on the basis of sexual orientation and gender identity.

This Final Rule will be effective 120 days after publication in the Federal Register (which has not yet occurred) and will apply to federal contracts entered into or modified on or after that date.

What does the Final Rule change?

The EO Clause has been changed to include “sexual orientation” and “gender identity.” Those contractors who incorporate the EO clause by reference, however, will not need to physically alter their subcontracts or purchase orders.

Contractors must notify applicants and employees of their non-discrimination policy by posting the “EEO is the Law” poster. Presumably, the government will be updating this poster to include these two new categories.

Contractors are also obligated to expressly state in job advertisements that all qualified candidates will receive consideration for employment without regard to race, color, religion, sex, sexual orientation, gender identity, or national origin. The Final Rule provides that employers can satisfy this requirement by including that verbiage or simply indicating that the company is an “equal opportunity employer.”

Although employees hired outside of the United States are not covered by the regulations, if a contractor is not able to obtain a visa of entry for an employee or potential employee to a country in which it is doing business, the regulations require the contractor to notify both the OFCCP and the U.S. Department of State if the contractor believes that the refusal of the visa is due to the individual’s protected characteristic. This requirement now applies to sexual orientation and gender identity status. 

Affirmative Action Plan Placement Goals Changes

The section of the regulations regarding Placement Goals in AAPs has also been updated. Contractors are prohibited from extending preferences on the basis of race, color, religion, sex, sexual orientation, gender identity, or national origin due to specific placement goals.

What is not affected by the Final Rule?

The Final Rule does not change contractors’ reporting and information collection requirements, so contractors are not required to survey or report on the number of LGBT applicants or employees. The required components of Affirmative Action Plans are also not affected.

What should contractors do to comply?

The Final Rule simply adds sexual orientation and gender identity to the sections of the regulation where the other protected categories are listed, so the affect on federal contractors is limited. Contractors should, however, begin the process of determining whether and when they need to do the following:

• Update the EO Clause in subcontracts and purchase orders;

• Amend the EEO and AA policy to include sexual orientation and gender identity;

• Obtain new “EEO is the Law” posters;

• Modify their EEO tagline on job solicitations; and

• Train appropriate personnel on the new protections.

In addition, the OFCCP has issued FAQs regarding its interpretation of the Final Rule. These will probably be updated periodically as contractors pose questions to the OFCCP.

Why no proposed rule?

The OFCCP bypassed the Notice of Proposed Rule-making and comment period. They stated that the “Executive Order was very clear about the steps the Department of Labor was required to take and left no discretion regarding how to proceed. In such cases, principles of administrative law allow an agency to publish final rules without prior notice and comment when the agency only makes a required change to conform a regulation to the enabling authority and does not have any discretion in doing so.”

If you have any questions regarding this Final Rule, please contact a board certified labor attorney.

OFCCP Releases Final Rule on LGBT Non-discrimination