Workplace Regulation: DOL to Work Overtime Finalizing Its Aggressive Agenda

Employment Law, Inclusion and Diversity

The Department of Labor faces a time crunch this year in seeking to finalize a number of major rules before the next administration takes over, led by expansion of overtime coverage and the final rules implementing the Fair Pay and Safe Workplaces (a.k.a., Blacklisting) Executive Order.

FLSA Exempt/Nonexempt Rules  The most sweeping rulemaking in 2016 will likely be a final rule to extend overtime rights to nearly five million employees that currently have the flexibility of exempt status.  DOL spokesman Jason Surbey recently said the agency is "on track to issue a final rule by July 2016, with an effective date sometime after that."  The final rule could increase the minimum salary for "white collar" exemptions from the current $455 per week ($23,660 per year) to an estimated $970 per week ($50,440 per year), and could establish for those above that pay level a ceiling on the maximum percentage of time an exempt employee could spend performing nonexempt duties before they would lose the exemption.  The timing of the final rule and outcome of the fall election could be crucial for the rulemaking as Rep. Tim Walberg (R-MI), Chairman of the House Education and the Workforce Subcommittee on Workforce Protections, has said that a Congressional Review Act resolution of disapproval to block the rule certainly "would be an ultimate outcome that we would want to use if we have to." If the rule were to be issued late enough in the year, such an action could take place early in the next Congress, with a new President.  For actions taken by Congress under the Congressional Review Act, unlike normal procedures, there is no ability to block the measure in the Senate with a filibuster.  Thus, a simple majority is all that is needed.

Blacklisting  According to the most recent regulatory agenda, the U.S. Department of Labor and the FAR Council expect to issue final regulations and guidance implementing the Blacklisting Executive Order this spring.  However, that implementation will face two major challenges.  First, the business community—led by HR Policy, the U.S. Chamber of Commerce, National Association of Manufacturers, American Builders and Contractors, and the Associated General Contractors—are marshaling resources for a major challenge in federal court.  This would seek not only to block implementation of the Order but also establish a judicial precedent that could limit future efforts by a President to use the federal contracting authority to drive employment policy.  In addition, in the 2016 funding bill, Congress denied funding for an Office of Labor Compliance within the Department of Labor.  The Office is charged with assisting the contracting officers in the various federal agencies in applying the Executive Order, which requires determinations regarding the severity of adjudicated and alleged labor law violations by contractors, and their efforts to comply.  The Office thus will not be funded in 2016.

Use of Smart Phones by Nonexempt Employees and Scheduling Practices  The Labor Department is expected to publish a Request for Information about employees' use of electronic devices to perform work outside of regularly scheduled work hours and away from the workplace, as well as information regarding "last minute" scheduling practices being utilized by some employers that are made possible in large part by employees' use of these devices.  The RFI could be a response to concerns expressed by HR Policy and other trade groups that the proposed overtime rulemaking will limit workplace flexibility by discouraging employers from allowing their nonexempt employees to do any work outside the workplace and by denying them the employer-provided smartphones, access to their email accounts, and other components of the company's information system because of the potential threat of litigation.

Push for Scheduling Rights Will Continue to Grow  Efforts to provide scheduling rights to employees will continue to ramp up at the state and local level in 2016 and will likely be an important issue in Secretary Clinton's presidential campaign.  As noted above, DOL is going to request information on the impact "last minute" scheduling practices have on employees and what changes could be made to the FLSA regulations regarding "waiting time" and "on-call time" to discourage perceived abuses.  In 2015, 10 states (California, Connecticut, Illinois, Indiana, Maine, Maryland, Massachusetts, Minnesota, New York and Oregon) had scheduling rights legislation introduced that are similar to the ordinance San Francisco enacted in 2014, and will likely see those bills introduced again in 2016.  Although scheduling rights legislation (H.R. 3071 and S. 1772) is unlikely to move in Congress this year, President Obama or his successor could issue an Executive Order establishing these requirements for federal contractors.

Paid Leave (EO and New State Laws)  The DOL Wage and Hour Division expects to publish a proposed rule early in 2016 implementing Executive Order 13706 that requires federal contractors to provide employees with one hour of paid sick leave for every 30 hours worked.  A final rule is expected by September 2016.  Currently, California, Connecticut, Oregon, Rhode Island, Washington, and the District of Columbia have paid leave laws, althought the state of Washington has yet to be able to fund its law.  Oregon became the most recent state to pass the law.  Cities such as Jersey City, New York, Pittsburgh, Philadelphia, Oakland, and San Francisco have enacted paid leave laws.  In 2015, Montgomery County, Maryland became the first county to enact a paid leave law.  Look for more action at the state and local level this year on the heels of President Obama's Executive Order.  Paid leave will also be a big campaign issue as Hillary Clinton revealed details about her paid family leave plan this week.  Clinton's plan would include twelve weeks of paid family and medical leave with a minimum wage replacement rate and will resemble the pending FAMILY Act.  However, the plan differs in the way it would be funded.  Instead of an insurance program with contributions from the employer and employee, Clinton would pay for her plan with a tax on the wealthy.  Bernie Sanders plans to discuss his paid leave plan in a news conference in Iowa today.

Equal Pay and OFCCP's Equal Pay Report  Although Congress is not likely to consider the Paycheck Fairness Act in 2016, a number of states are expected to follow California's lead and consider fair pay laws that require men and women be paid the same for "substantially similar" work, with exceptions only for seniority, merit and productivity.  The current federal standard under the Equal Pay Act is to require equal pay for "equal" work.  Equal pay bills were introduced in 21 states in 2015.  Despite the concern expressed by Congress in the Omnibus Appropriations Bill that passed at the end of last year, OFCCP is expected to finalize its Equal Pay Report rulemaking in May that will require federal contractors to report the total number of employees, total W-2 earnings, and total hours worked for each EEO-1 job category by race, gender and ethnicity for each establishment, including the headquarters' location.  The EEOC is also conducting a pilot study on how to collect similar pay data from all employers.

Congress Reins In OFCCP Enforcement  As part of the 2016 omnibus appropriations bill, Congress expressed its concern that the Office of Federal Contract Compliance Programs "has lost its focus on identifying and addressing real discrimination in employment and has become hyper-focused on fulfilling quotas instead of equal opportunity by relying on statistics alone in evaluating contractors..." It further instructed the agency to "end its reliance on threatening sanctions, including debarment and the costs associated with an extremely drawn-out administrative litigation process, to induce contractors to waive their legal rights and to enter into conciliation agreements that are not justified by the evidence."  It remains to be seen whether the OFCCP complies with Congress' instructions this year.