Overtime Update: Will the Texas Decision Invalidating the DOL Overtime Rule Survive and What Should Employers Do Now?

By Kenneth M. Bello

Now that a federal judge has issued a preliminary injunction staying implementation of the new DOL regulations revising salary thresholds for determining application of the white collar minimum wage and overtime pay exemptions, otherwise slated to go into effect on December 1st, what happens next, and how quickly will that occur?  Here are the possibilities.

  • An interlocutory appeal to the 5th Circuit Court of Appeals. How that comes out is anyone’s guess, but the case is vulnerable in its analysis, as detailed below.
  • Congressional Action that renders the decision academic. On September 28, 2016, the House of Representatives passed H.R. 6094, titled Regulatory Relief for Small Business, Schools, and Nonprofits ActThe bill would have changed the effective date of the revised overtime regulations from December 1, 2016 until June 1, 2017.  With a Republican majority in both the House and Senate, there is a very real possibility that some form of law will be filed and passed in 2017.  The question of course is what will that bill look like – for examples, will it exempt “small business”, and will it change the minimum salary amounts and/or remove automatic indexing?

Read more

EEOC Publishes Strategic Enforcement Plan for Fiscal Years 2017-2021

By Martha J. Zackin

EEOC recently published its Strategic Enforcement Plan (SEP) for Fiscal Years 2017-2021, in which it outlines the areas in which it intends to focus its strategic litigation and enforcement activities in the coming years.  Not surprisingly, the EEOC indicates that it intends to expend significant resources on understanding and protecting temporary employees and members of the gig workforce.

As described in the SEP, EEOC’s substantive priorities for Fiscal Years 2017-2021 are: Read more

Final Rule and Guidance Issued Implementing Fair Pay and Safe Workplaces Executive Order

On August 25, 2016, the Department of Defense (DoD), General Services Administration (GSA), and National Aeronautics and Space Administration (NASA) issued a Final Rule amending the Federal Acquisition Regulation (FAR) to implement Executive Order 13673, the Fair Play and Safe Workplaces Executive Order (also known as the “blacklisting rule”).  The Department of Labor (DOL) also issued Final Guidance to assist the FAR Council and federal contracting agencies in the implementation of EO 13673.

Signed on July 31, 2014, and as described here, EO 13673 requires prospective and current federal contractors and subcontractors to disclose all violations of federal labor laws that result in administrative merits determinations, arbitral awards or decisions, or civil judgments. The Order also requires contractors and subcontractors to disclose specific information to workers each pay period regarding their wages and prohibits contractors from requiring that their workers sign arbitration agreements that encompass claims of sexual assault or harassment.

The Final Rule is effective October 25, 2016, which is earlier than had been expected. Fortunately, certain obligations under the Final Rule are now phased in, meaning that contractors and subcontractors have time in which to come up to full compliance. Contracts valued at or under $500,000 are excluded from the Final Rule, as are subcontracts for goods that are “commercially available off-the-shelf” items.

Disclosure. When fully implemented, contractors will be required to disclose violations of fourteen federal workplace laws from the previous three years – including laws addressing wage and hour, safety and health, collective bargaining, family and medical leave, and civil rights protections. The provision of EO 13673 requiring contractors to disclose violations of “equivalent” state laws has been paused, pending the DOL’s release of a comprehensive list of state laws covered by the Order; when released, this list will be subject to notice and comment before becoming effective.

Certain information pertaining to violations contractors disclose will be made public. These include: (1) the law violated; (2) the case number, charge number, docket number, or other unique identifier; (3) the date of the decision finding a violation; and (4) the name of the court, arbitrator, agency, board or commission that rendered the decision. Any other information provided voluntarily or at the request of the contracting officer (including information pertaining to mitigating factors and steps taken to achieve compliance) will not be made public unless the contractor chooses to make it so.

The process by which violations will be assessed is set forth in the Final Rule and Guidance. Initially, a new type of government official – an Agency Labor Compliance Advisor (ALCA) – will review the nature of the violations, to determine if any are serious, willful, repeated, or pervasive. After weighing any such violations against the severity of the violations, the size of the contractor, and any mitigating factors, the ALCA will provide his or her recommendation to the contracting officer.  As before, the decision to award or extend a contract rests with the contracting officer, who must determine whether the contractor is responsible and has a satisfactory record of integrity and business ethics.

Pay Transparency. The Final Rule also requires contractors to provide workers with detailed wage statements every pay period, which must include: (1) total number of hours worked per pay period; (2) any overtime hours worked; (3) rate of pay; (4) gross pay; and (5) itemized additions to or deductions from gross pay. Contractors must also provide employees with written notice of their status as exempt or non-exempt from the overtime compensation requirements of the Fair Labor Standards Act. Workers treated as independent contractors must be notified, in writing, of this status.

Arbitration. In addition, the Final Rule prohibits pre-dispute arbitration agreements that cover claims arising under Title VII of the Civil Rights Act of 1964 or any tort related to or arising out of claims of sexual assault or harassment. These disputes may be arbitrated, but only by voluntary consent given after any such dispute arises.

Implementation Schedule. The Final Rule sets forth a “phased-in” reporting requirement as follows (and as summarized by DOL here):

  1. September 12, 2016: Preassessmentbegins, through which current or prospective contractors may come to DOL for a voluntary assessment of their labor compliance history, in anticipation of bids on future contracts but independent of any specific acquisition.
  2. October 25, 2016: Mandatory disclosure and assessment of labor law compliance begins for all prime contractors under consideration for contracts with a total value greater than or equal to $50 million. At first, the reporting disclosure period is limited to one (1) year and will gradually increase each year to a maximum disclosure period of three (3) years by October 25, 2018. Also, contractors and subcontractors whose contracts are valued at more than $1,000,000 are prohibited from requiring employees to sign pre-dispute arbitration clauses covering claims arising out of Title VII or claims for sexual assault or harassment.
  3. January 1, 2017: The Paycheck Transparency clause takes effect, requiring contractors to provide wage statements, notice of overtime status, and notice of any independent contractor relationship to their covered workers.
  4. April 25, 2017: The total contract value threshold for prime contracts requiring disclosure and assessment of labor law compliance drops to $500,000.
  5. October 25, 2017: Mandatory assessment begins for all subcontractors under consideration for subcontracts with a total value greater than or equal to $500,000 (other than subcontracts for commercially available off-the-shelf items).

Action Items. Even with a phased-in implementation schedule, there is much to be done.  For example:

  1. Current or prospective contractors should decide whether to participate in the DOL’s preassessment process. According to information provided by DOL (here), using the published Final Guidance, if a contractor that has been assessed by the DOL as responsible subsequently submits a bid, the contracting officer and the ALCA may use the DOL’s assessment that the contractor has a satisfactory record of labor law compliance unless additional labor law violations have been disclosed.
  2. Contractors (and subcontractors) should begin developing and implementing processes for capturing information required by the Final Rule.
  3. Existing arbitration agreements should be reviewed for compliance.
  4. Existing training and compliance programs should be reviewed and revised, as appropriate, or new programs developed. A well-educated workforce can help minimize the risk of violations that must be reported

Workshop: Employment Law Basics for Start-Ups and Small Businesses

On October 29, 2014, Bello Welsh will present a session on HR and Employment Law Issues for Start Ups and Small Businesses at the Cambridge Innovation Center, 1 Broadway, Cambridge, MA.

Start-up companies focus on developing their idea and bringing their product or service to market.  Small existing businesses work to implement their core business goals and strategies.  In either case, there is often little inclination or staff to pay close attention to day-to-day employee issues.    After all, how difficult can it be to manage a workforce comprised of a relatively few employees?  The answer is “very.” HR is a complicated patchwork of federal, state and local laws, regulations and requirements, most of which apply in some form to employers of all types and sizes.  HR problems can surface when least expected, and can be extremely time consuming and costly.

In this discussion, you’ll learn how to manage the complexities of Small Business HR and to minimize the risk of preventable lawsuits, penalties, and time-consuming employee-relations issues.  For example, you’ll learn about:

  • Creating and maintaining appropriate documentation, including job descriptions, offer letters, personnel policies, and other personnel documents;
  • Managing employee performance and terminations;
  • Managing leaves of absence;
  • Dealing with wage & hour issues; and
  • Handling internal complaints and investigations

The session will be held on October 29, 2014, 6:00 p.m. to 8:00 p.m. , at the Cambridge Innovation Center, 1 Broadway, Cambridge, MA, in the Charles River Room (14th Floor).

Please register at the following site:  http://tinyurl.com/qjmk3ez