HR Policy Member Companies Urge Labor Secretary to Address FLSA Disconnect With the Modern Workplace

Employment Law, Inclusion and Diversity

This week, several HR Policy member companies from a broad range of industries met with Labor Secretary Thomas Perez to discuss their views regarding the Department's response to President Obama's directive that the wage and hour laws be "updated and modernized."  The Secretary met with the Association and the Business Roundtable as part of his effort to hear from all stakeholders prior to issuing proposed changes in the Fair Labor Standards Act regulations.  According to the Department's regulatory agenda, those are projected to be issued in November.  The Secretary expressed an interest in minimizing litigation and avoiding unintended consequences.  He emphasized that the proposed rules have not been drafted.  However, indications are that the Department will raise the minimum salary for an employee to be exempt from $455 per week ($23,600 per year) to potentially as high as $970 per week ($50,440 per year) while also establishing that a minimum percentage of time be spent performing exempt work.  At our meeting, companies weighed in on the impact this would have on management associates, especially in retail, who would lose the flexibility and status they now have as exempt salaried employees.  Companies from other industries expressed frustration over the current ambiguities in existing law that foments lawsuits that are often settled just to avoid the uncertainty and expense of the lawsuit.  Notably, the Federal Judicial Center reported last week a record 8,126 FLSA lawsuits were filed in federal courts during the 12-month period ending March 31, 2014, up 4.7 percent over the previous year, and 237 percent over the past ten years.  Secretary Perez seemed appreciative of the opportunity to meet with us and told us it was "a great start."