Fair Labor Standards Act

On July 26, 2017, the Department of Labor asked the public for comments concerning revisions to the overtime rules.  Only a week later, the DOL has received over 12,000 comments. However, it appears a move is underway whereby individuals are cutting and pasting the same statement literally thousands of times. It appears an individual posted the 70th comment on July  31, 2017 (WHD-2017-0002-2990), stating that President Ford set the salary threshold in 1975 at what would be $58,000 today, and thus, the DOL should keep the $47,476 in tact (or greater). From what I can tell, the remainder 11,930 submissions so far have simply cut and pasted this comment. This makes it incredibly difficult to find and review different positions and share them here. Perhaps the DOL could institute an “Agree” or “Disagree” feature in the future?

 

The United States Department of Labor officially published its Request for Information (RFI 1235-AA20); Defining and Delimiting the Exemptions for Executive, Administrative, Professional, Outside Sales and Computer Employees, today. In doing so, the DOL expressly acknowledged many employer’s concerns that the previously-set salary threshold of $913 per week was too high, it inappropriately excluded too many workers from the exemption who otherwise would pass the standard duties test, and it adversely impacted low-wage regions and industries. Accordingly, the RFI is intended to gather additional data regarding how the December 1, 2016 regulations affected employers and employees, and how the regulations could better be updated moving forward.

The RFI can be found at regulations.gov, where comments may be electronically submitted with a single click. Given the pending litigation in the District of Texas and the 5th Circuit Court of Appeals, the DOL is merely asking for public comment at this time, versus publishing a formal Notice of Proposed Rulemaking. The DOL acknowledges that the RFI is issued consistent with President Trump’s February 24, 2017 Executive Order 13777, “Enforcing the Regulatory Reform Agenda” which tasks federal agencies to identify regulations for repeal, replacement, or modification which meet certain requirements, such as hindering job growth.

The DOL is asking employers to weigh in on eleven (11) questions (summarized below):

  1. Should the DOL simply update the 2004 salary level ($455/wk) for inflation?
  2. Should multiple salary levels be created, and if so, how (size of employer, region, etc.)?
  3. Should there be different salary levels for executive, administrative and processional (as it was prior to 2004)?
  4. Should the DOL return to using the long and short test salary levels (and would the duties test need to change if so)?
  5. Does the 2016 salary threshold ($913/wk) in effect negate the duties test?  And if so, at what threshold does it not negate the duties test?
  6. What actions did employers take to prepare for the December 1, 2016 regulation (i.e., increase salaries, change hours, reduce pay, etc.)?
  7. Would it be preferable to base exemptions on duties only (no salary threshold)?
  8. Does the $913/wk threshold exclude occupations traditionally covered as exempt?
  9. Is the 10% non-discretionary bonus and incentive payment credit towards satisfying the salary threshold appropriate?
  10. Should the highly compensated thresholds have multiple levels, and if yes, how (i.e. size of employer, region, etc.)?
  11. Should the salary levels be automatically updated periodically, and if so, how/when?

The public has until September 25, 2017, to submit comments. Following the close of the comment period, employers can expect more waiting, as usual.  It appears from the RFI that the DOL will not be issuing a Notice of Proposed Rulemaking while the cases are ongoing, so as is the norm, we will continue to wait.

The United States Department of Labor announced today that, as indicated in the 5th Circuit Appeal recently, it will be publishing a new Request for Information (RFI) concerning the overtime regulations (technically, “Defining and Delimiting the Exemptions for Executive, Administrative, Professional, Outside Sales and Computer Employees”) tomorrow. The July 26, 2017 RFI will seek public comments regarding the salary level test (recall the DOL told the 5th Circuit that it was dropping the $913/wk overtime threshold), the duties test, varying cost-of-living (i.e. the fact that one salary threshold may be inappropriate nationwide), inclusion of non-discretionary bonuses and incentive payments, highly compensated employee salary test, and automatic updating of such salary levels.

The RFI will be open for 60 days during which the public may submit comments.

The United States Department of Labor (DOL) recently announced its decision to once again issue Opinion Letters, Ruling Letters, Administrator Interpretations and Field Assistance Bulletins.  They will be published on the DOL website here, along with past opinions (pre-2009).  Interpretations by the DOL Administrator that interpret the Fair Labor Standards Act (FLSA), Davis-Bacon Act (DBA) or Walsh-Healey Public Contracts Act (PCA), are considered “official rulings”, and thus, provide employers with a good faith reliance defense when so relying. This guidance is very helpful when employers are trying to understand how to interpret the FLSA, DBA or PCA with various facts.

Often, numerous employers have the same questions of interpretation, and thus, opinion letters are very helpful when such common questions arise. The last opinion letters were published in January 2009, and withdrawn by the Obama Administration when the letters were literally not put in the mail in time before the administration changed. If you’d like to receive a notice when new rulings and interpretations come out, you can do so here.

 

 

arrow-23284On June 7, 2017, the U.S. Department of Labor announced its withdrawal of two Obama-era opinion letters, stating the removal does not “change the legal responsibilities of employers under the Fair Labor Standards Act (FLSA) or Migrant and Seasonal Worker Protection Act”. However, certainly such withdrawal is meaningful from an enforceability standpoint, as well as the deference such interpretations have been historically given by the courts. That being said, the DOL has not issued replacement guidance, so how the DOL’s interpretation will change is not yet clear. What we do know is that courts will no longer consider these interpretations, let alone provide them deference in deciding how to interpret the law.

The first, Administrator’s Interpretation No. 2015-1 (July 15,2015), is, “The Application of the Fair Labor Standards Act’s ‘Suffer or Permit’ Standard in the Identification of Employees Who Are Misclassified as Independent Contractors.” In short, AI 2015-1 boldly concluded that, “In sum, most workers are employees under the FLSA’s broad definitions. The very broad definition of employment under the FLSA as ‘to suffer or permit to work’ and the Act’s intended expansive coverage for workers must be considered when applying the economic realities factors…”. By withdrawing such opinion, the DOL has signified a shift toward more targeted requirements when determining whether an individual is an employee or independent contractor.

The second, Administrator’s Interpretation No. 2016-1, is “Joint employment under the Fair Labor Standards Act and Migrant and Seasonal Agricultural Worker Protection Act.” When published, this opinion letter established, for the first time, the distinction between “horizontal” and “vertical” employment. It concluded that joint employment has become more common, and that joint employment should be “regularly considered” in FSLA and MSPA cases. Further, referring to AI-2015-1 (the other opinion letter withdrawn), the DOL stated, “As with all aspects of the employment relationship under the FLSA and MSPA, the expansive definition of ’employ’ as including ‘to suffer or permit toward’ must be considered when determining joint employment, so as to further the statutes’ remedial purposes.” Similarly, we don’t yet know what the DOL’s position is now with respect to joint employment under the FLSA, but it is very likely that it will be less onerous on employers.

Wheelchair ParkingOn May 10, 2017, in LaCurtis v. Express Med. Transporters, Inc. (8th Cir., 2017), the Eighth Circuit Court of Appeals held that 7 passenger paralift van drivers are not exempt under the Motor Carrier Act (MCA) exemption to the Fair Labor Standards Act (FLSA), even though the vans (which are less than 10,000 pounds) were originally designed to transport up to 12 or 15 passengers.

The FLSA has an exception for (and thus, does not regulate) certain drivers and helpers who are covered under the Department of Transportation Secretary’s authority. However, the Motor Carrier Act exemption to the FLSA was narrowed in 2008 by the SAFETEA-LU Technical Corrections Act (TCA). The TCA provides that certain employees are eligible for overtime under the FLSA (and not covered by the MCA exemption), if their work affects the safety of operation of motor vehicles weighing 10,000 pounds or less – UNLESS – the vehicle is “designed or used” to transport more than 8 passengers (including the driver).

Accordingly, in this case, the vans at issue are less than 10,000 pounds, but were originally designed to transport up to 12 and 15 employees, respectively. However, in the conversion to paralift vans, seats were removed, and the vans reconfigured for wheelchairs. Thus, the dispute rested on whether the term “designed” meant as originally designed (for up to 12 or 15 persons), or as currently designed (for up to 7 persons plus a driver).  The Eighth Circuit concluded that Congress intended for the term “design” to not be limited to a vehicle’s original design.  The Court held that as the vans were comprehensively redesigned and substantially modified to seat 7 passengers, and weighed less than 10,000 pounds, the employees were eligible for overtime and the MCA exemption to the FLSA did not apply.

I was presenting a “Hot Topics in Employment Law” update at our 12th Annual Labor Law Forum in Bloomington, Minnesota today, and realized that I had gotten woefully behind on staying updated as to the status of the FLSA white-collar overtime regulations overhaul. So, here it is. As of April 19, 2017, the 5th Circuit Court of Appeals has granted the U.S. Department of Labor’s second unopposed motion to extend the deadline to file its reply brief, as the nominee to be the Secretary of Labor had not yet been confirmed. The Court granted the motion, allowing the DOL until Friday, June 30, 2017 to file its reply brief (or withdraw its appeal).

On April 28, 2017, R. Alexander Acosta was sworn in as the 27th United States Secretary of Labor. Accordingly, I suspect there will be no more delays, and, looking into my crystal ball, will not be shocked if the DOL chooses to withdraw its appeal.