Tag: DOL

Executive Action: Obama’s Legacy and 2016 Predictions (Part 2 of 2)

As promised in our previous post, today we conclude our predictions on President Obama’s 2016 executive activity.  While we believe the President’s final executive orders will target immigration and perhaps even corporate political expenditures, we predict executive agency action will cover a broad range of pressing labor and employment issues.  With federal legislative gridlock expected to continue through 2016, employers should prepare themselves for a barrage of agency activity, especially from the Equal Employment Opportunity Commission (“EEOC”), National Labor Relations Board (“NLRB”), and Department of Labor (“DOL”).  Our summary is below.

Expected Agency Activity of 2016

Based on the 2015 Supreme Court decisions in Young v. UPS and EEOC v. Abercrombie & Fitch Stores, Inc. and the EEOC’s interest in systematic discrimination in the workplace, we predict the EEOC will focus heavily on companies’ policies regarding pregnancy and religious discrimination and accommodation in 2016.  As a refresher, in Young the Court held a genuine factual dispute existed as to whether UPS provided more favorable treatment to at least some employees whose situation “cannot reasonably be distinguished” from Ms. Young’s —e.g., workers unable to lift up to 70 pounds due to reasons other than pregnancy limitations such as a workplace injury or a recognized disability.  In Abercrombie (blogged about here) the Court concluded an employer violates Title VII by rejecting an applicant in order to avoid making a religious accommodation, even if the employer only has an “unsubstantiated suspicion” that the applicant may eventually request an accommodation.

Along with discrimination/accommodation policies, we predict the EEOC and NLRB will focus on company-wide social media policies in 2016. While the NLRB has been hounding employers on social media policies since 2010, the EEOC did not really begin gathering information on the issue until 2014.   We believe 2016 will be the year the EEOC begins targeting employers’ social media policies to evidence discrimination.  We also predict the EEOC’s focus on gender identity discrimination and the NLRB’s focus on FLSA class action settlements will continue with full force into 2016.

With the DOL’s Final Rule on overtime exemption updates expected to roll out this year, we predict the agency will focus on wage-hour reform and that employers will be expected to get into compliance sooner rather than later. Although Solicitor of Labor Patricia Smith stated in November 2015 that final guidelines will not likely be issued until “late 2016,” we believe the DOL will push them out before November’s presidential election.  Employers should expect the Final Rule to increase the minimum salary exemption requirement from $455/week to $970/week.  We would not be surprised if the DOL also finalizes revisions to the duties test, which is a factor along with salary level used to determine whether an employee qualifies under a white collar exemption to minimum wage and overtime rules.

Although the 2016 federal legislation horizon looks bleak, President Obama and his executive agencies are poised for a busy final year. Stay tuned for further developments.

Article By Kristine M. Woliver of Squire Patton Boggs (US) LLP
© Copyright 2015 Squire Patton Boggs (US) LLP

DOL’s Recent Guidance on State Retirement Initiatives for Private Sector Employees Part II: Interpretive Bulletin

140px-US-DeptOfLabor-Seal.svg__0This post continues our two-part series discussing the Department of Labor’s (DOL’s) recent guidance on state retirement initiatives. The first part of this series, “The Proposed Rule—State-Sponsored IRAs,” discusses the DOL’s proposed rule that would create an ERISA “safe harbor” for state-sponsored IRAs. In Part II, we discuss the DOL’s Interpretive Bulletin (Interpretive Bulletin), which addresses other types of state retirement initiatives for workers in the private sector.

The Interpretive Bulletin sets out, in a summary format, the DOL’s views on state-offered 401(k) plans for private sector employees and other state initiatives. Beginning with the DOL’s strong support for ERISA-covered plans (for reasons including the availability of employer contributions, higher contribution limits, and the protection of ERISA accounts from creditors), the Interpretive Bulletin surveys a range of current and potential state-sponsored programs and offers the DOL’s views on how ERISA coverage may apply to each of these initiatives.

The Interpretive Bulletin reviews programs in

  • Washington State, where the state’s proposed retirement program is not considered to be an ERISA-covered plan, but instead by design establishes a marketplace for the offering of ERISA plans and IRAs;

  • the Commonwealth of Massachusetts, where a state law allowing nonprofit organizations to adopt a contributory retirement plan developed and administered by the state is shown as an example of how states may set up their own 401(k) prototype plans for private employers to adopt; and

  • the State of Maryland, where a Governor’s Task Force report considered the possibility of the state establishing and obtaining IRS tax qualification for a state multiple-employer plan (MEP).

The DOL closes by providing its views on ERISA preemption, including the view that the types of programs outlined in the Interpretive Bulletin would not be preempted by ERISA because they do not “undermine ERISA’s exclusive regulation of ERISA-covered plans” and that they “contemplate a state acting as a participant in a market rather than as a regulator.”

Several issues addressed in the Interpretive Bulletin are giving rise to debate, including the DOL’s view that a state’s unique “representational interest in the health and welfare of its citizens” allows a state to sponsor an MEP for in-state employers. What is new here is that the DOL is providing states a different standard for the establishment of an MEP than the “employment based nexus” standard that the DOL established for private enterprises that wish to do the same. This issue is critical because MEPs can have streamlined regulatory reporting and disclosure requirements, allowing them to provide competitive cost savings to adopting employers. Another issue to watch is the DOL’s query (included as a footnote in the bulletin) on whether state sovereign immunity laws need to be reviewed in light of ERISA’s remedial provisions.

While the DOL’s Interpretive Bulletin became effective on November 18, 2015, the impact of the Interpretive Bulletin and the proposed rules on IRAs are worth keeping an eye on. We recognize that change is often the rule and not the exception, but how these state-sponsored programs will play out has yet to be determined. A significant impact to the retirement industry could be on the horizon.

In addition to this DOL guidance package discussed in this series, there is also talk of possible legislative proposals, and the Treasury Department recently announced the federal myRA program as a voluntary national initiative.

Article By Marla J. Kreindler & Matthew J. Chapman of Morgan, Lewis & Bockius LLP

© 2015 by Morgan, Lewis & Bockius LLP. All Rights Reserved.

Act Now: The Department of Labor may experience a shutdown on 10/1/2015

DOLAlthough Congress continues to discuss the Fiscal Year 2016 budget, if an agreement is not reached or continuing resolution passed, the Department of Labor (DOL) will experience a shut down as of October 1, 2015. Should this happen, both the iCERT and PERM online filing systems will not accept applications and users will no longer have access to the system.  This shutdown will impact immigration cases including: E-3, H-1B, H-2A, H-2B, and PERM applications. In addition, the DOL will not be able to receive or review any filings received by mail. Employers are urged to review their upcoming expiration dates and deadlines to ensure they submit all necessary applications and responses on or before September 30, 2015.

Article By Jennifer Blloshmi of Greenberg Traurig, LLP

©2015 Greenberg Traurig, LLP. All rights reserved.

Department of Labor Glitch Prevents PERM Filings re: Immigration

A programming glitch, which occurred during a software update implemented by the Department of Labor (DOL) on September 1, 2015, prevented some employers from being able to file their PERM applications, the DOL announced today on its website. The DOL explained that the malfunction precluded employers from completing some of the ETA Form 9089 online.

The problem with the Permanent Labor Certification Case Management System (CMS) continues and the DOL has directed employers who are unable to complete and file an ETA Form 9089 online to mail in their PERM applications to the Atlanta National Processing Center. The DOL is authorizing those employers who tried and could not file a PERM application online between September 1, 2015 and September 11, 2015, only, to include documentation demonstrating that information in their ETA Form 9089 was affected by the programming glitch.

If your PERM application was affected last week, you must submit your ETA Form 9089 and supporting documentation before September 30, 2015. Please see the DOL’s Employment & Training Administration’s web page for filing instructions here.

Article By Rebecca B. Schechter of Greenberg Traurig, LLP

©2015 Greenberg Traurig, LLP. All rights reserved.

Workers Should Properly be Classified as Employees Under the FLSA

U.S. Department of Labor (“DOL”) yesterday issued an Administrator Interpretation Memorandum announcing its position that most American workers are employees (as opposed to independent contractors), and thus are covered by the Fair Labor Standards Act (FLSA). The announcement comes exactly two weeks after the DOL issued a Notice of Proposed Rulemaking that would significantly change the legal requirements for an employee to qualify as exempt from the overtime requirements of the FLSA.

Department of LaborAccording to the Memo, employers are intentionally misclassifying workers as independent contractors to cut costs and avoid compliance with various laws, which deprives workers of certain benefits of employment. Taken together, the two recent DOL actions make the DOL’s true intentions abundantly clear: to sweep more American workers under the umbrella of the FLSA, and in turn, have more of those covered employees earning overtime compensation (or significantly higher salaries).

In the Memorandum, the DOL sets forth its interpretation of the FLSA’s definition of “employ” and the multi-factored “economic realities test” utilized by the courts to guide the analysis of whether a worker is properly classified as an independent contractor under the law. According to the DOL, applying the economic realities test in view of the FLSA’s expansive definition of “employ” will result in most workers being employees, and not independent contractors. In other words, a worker is an employee unless a convincing argument can be made that the worker is properly classified as an independent contractor.

While the “economic realities test” might vary somewhat depending on the court applying the test, the traditional questions considered are:

  • Is the work done by the worker an integral part of the employer’s business?;
  • Does the worker’s managerial skill affect the worker’s opportunity for profit or loss?;
  • How does the worker’s relative investment compare to the employer’s investment?;
  • Does the work performed require special skill and initiative?;
  • Is the relationship between the worker and the employer permanent or indefinite?; and
  • What is the nature and degree of the employer’s control over the worker?

These questions should be considered under the guiding principle that workers who are economically dependent on the employer are employees, and only workers who are really in business for themselves are independent contractors. All factors must be considered in each case, no one factor is determinative, and the ultimate determination must be the degree of the worker’s economic independence from the employer.

ARTICLE BY Jeremy M. Brenner, John P. Hasman, Robert A. Kaiser, Daniel K. O’Toole, Jovita M. Foster & Dione C. Greene of Armstrong Teasdale

© Copyright 2015 Armstrong Teasdale LLP. All rights reserved

New Overtime Rules: $970 Per Week Salary Proposed For White Collar Exemptions in 2016

The minimum weekly salary for exempt employees will be raised from the current $455 to a likely $970 in 2016, if the Department of Labor’s (DOL’s) overtime pay revisions go into effect as proposed. In its long-awaited proposed revisions to overtime rules, the DOL estimates that 4.6 million U.S. workers who are currently exempt will be entitled to minimum wage and overtime compensation under the new salary level requirements.

Salary Level Would Automatically Adjust on an Annual Basis

Under its proposed rules, the DOL sets the salary threshold for the white collar exemptions at the 40th percentile of weekly earnings for full-time salaried workers nationwide. For 2013, using data from the Bureau of Labor Statistics, that figure was $921 per week, or $47,892 per year. The DOL anticipates that when its Final Rule goes into effect in 2016, the salary level will be $970 per week, or $50,440 per year.

In order to maintain the salary levels at a fixed percentile of earnings, the DOL proposes that the salary threshold automatically update annually. The automatic adjustment is intended to prevent the salary level from diminishing through inflation and to potentially make additional rulemaking adjusting the salary basis unnecessary. The DOL believes that this will provide more certainty to employers with a meaningful, bright-line test while improving government efficiency.

Highly Compensated Employee Exemption: $122,148 Salary

The current exemption for highly compensated employees requires an annual salary of $100,000. The DOL proposes to raise that salary threshold also based on an annualized value of a percentile of weekly earnings for full-time salaried workers. This proposal sets the salary level of highly-compensated employees at the 90th percentile, which was $122,148 per year for 2013. That number will likely be higher by the time the Final Rule is implemented. This salary requirement would also adjust automatically to the level equal to the 90th percentile of earnings for full-time salaried workers.

No Proposed Changes to Duties Requirements

Since 2004, the duties tests for the white collar exemptions have not included a limit on the amount of time that an employee can spend on nonexempt duties before the exemption is lost. Believing that a rise in the salary level will provide an initial bright-line test for the exemptions, the DOL refrained from proposing changes to the duties tests but will consider requests for changes during the comment period.

In its proposal, the DOL noted that employer stakeholders opposed any changes to the duties requirements as percentage limits on the amount of time spent on nonexempt duties are sometimes difficult to apply and hinder flexibility for work duties. Employee groups, on the other hand, expressed concern that certain businesses treat workers as exempt even though the employees perform mostly nonexempt duties, especially (they claim) in the retail industry. Without proposing its own duties requirements, the DOL seeks input from interested parties on whether changes to the duties tests are necessary in light of the salary level increases proposed.

Nondiscretionary Bonuses May Be Included in Salary Level Requirement

In the past, the DOL has not included nondiscretionary bonus payments when determining whether an employee’s salary meets the white collar exemption threshold; it looked only at actual salary or fee payments made to employees. In its proposed rules, the DOL seeks input on whether it should permit some amount of nondiscretionary bonuses and incentive payments to count toward a portion of the salary level requirement for the executive, administrative and professional exemptions. The DOL states that for these bonuses or incentive payments to count toward the weekly salary requirement, the bonuses and incentive payments would need to be paid monthly or more frequently, not as a yearly “catch-up” payment.

Next Steps

If you want to submit any comments on the DOL’s proposed changes to the overtime rules, you have 60 days in which to submit your input either electronically or by mail. Instructions are at the beginning of the Notice of Proposed Rulemaking.

After considering comments from interested parties, the DOL will decide whether to make any revisions to its proposed overtime rules and will issue its Final Rule sometime thereafter. Although the final version of the rules may change slightly, you should begin preparing for the changes now.

Examine your payroll records to determine which employees are currently treated as exempt under the various white collar exemptions. Determine which, if any, would or would not meet the new salary thresholds: $50,440 per year for executive, administrative and professional exemptions and $122,148 for highly compensated employees. Review the duties tests to make sure your exempt employees are performing exempt tasks.

After this review, consider how your organization is going to handle those employees who may not qualify as exempt under the new rules. Do you want to increase their salary to meet the new threshold? Change their status to nonexempt and pay them minimum wage and overtime? Do you need to change their duties to make sure they meet the duties tests? Have these internal conversations now so that you are not caught off guard when the Final Rule goes into effect in the coming months.

ARTICLE BY R. Calder Huntington of Holland & Hart LLP
Copyright Holland & Hart LLP 1995-2015.

DOL’s Upcoming Proposed Revisions to the FLSA’s White Collar Exemption Regulations

This month the Department of Labor is expected to propose, for the first time since 2004, revised regulations concerning the executive, administrative, professional, outside sales, and computer exemptions under the Fair Labor Standards Act. These revisions were prompted by President Obama’s March 13, 2014 memorandum to the Secretary of Labor, which stated that the exemptions “have not kept up with our modern economy” and which “direct[ed] [the DOL] to propose revisions to modernize and streamline the existing overtime regulations.” After the memorandum was issued, the agency began writing proposed regulations and announced on May 5, 2015, that it had completed drafting them and had submitted them (as required by Executive Order 12866) to the Office of Management and Budget for review.

Procedurally, the “proposed rules” will be published in the Federal Register (an action known as a “Notice of Public Rulemaking” or “NPRM”) for public comment following the OMB’s review, and the DOL has stated that it expects to take this step this month. After the public comment period closes, the DOL will consider the public comments in drafting “final rules;” submit them for a final review by the OMB; and then publish them in the Federal Register with an effective date on which they become law. Although implementation of the final rules may not occur until well into 2016, traditionally the final rules do not differ substantially from the proposed rules. Accordingly, employers should get a sense this month of what the future regulatory landscape will look like.

So what can we expect from these revisions? As an initial matter, it’s almost certain that the DOL will raise the $455 minimum salary requirement, which hasn’t changed since 2004. With regard to the other revisions, however, the DOL’s drafting process has been opaque, and official pronouncements have been largely limited to the Presidential Memorandum and the DOL’s description of the regulatory action on its Spring 2015 agenda, neither of which provide any specific detail. Nonetheless, unofficial pronouncements (including the Secretary of Labor’s remarks before the International Association of Firefighters on March 18, 2014) have repeatedly stressed the DOL’s position that the current regulations result in too many employees falling under the exemptions, particularly retail managers who spend a large portion of their time performing non-exempt duties. Accordingly, there is speculation that the DOL may eliminate the “concurrent duties” provision of 29 CFR 541.106, which provides that simultaneously performing both exempt and nonexempt duties will not automatically disqualify an otherwise exempt employee from the executive exemption. There is also speculation that the regulations may impose a set percentage cap on the amount of time an exempt employee may spend on non-exempt duties, similar to exemption provisions under some state laws (such as California and Connecticut) and to some provisions of the pre-2004 FLSA regulations.

In any event, one thing is certain – some employees who are properly classified as exempt under the current regulations will no longer be exempt under the new rules. Employers will shortly have a preview of just how drastic these changes will be, and should begin evaluating their compliance with the regulations well in advance of the implementation of the final rules.

ARTICLE BY Dennis M. Mulgrew, Jr. of Drinker Biddle & Reath LLP
©2015 Drinker Biddle & Reath LLP. All Rights Reserved

Uncertainty Follows Judicial Decision Enjoining DOL’s Same Sex Spouse Rule Change

Dinsmore Shohl LLP

Following Indiana Governor Mike Pence’s decision to sign the Religious Freedom Restoration Act (RFRA), a decision by Texas District Court Judge Reed O’Connor adds to the controversy and conversation surrounding the lesbian, gay, bisexual, transgender (LGBT) rights movement.

Opponents to the Indiana law say it will allow businesses to deny services to customers based on customers’ sexual orientation or gender identity and justify this denial based on religious beliefs. A day after Governor Pence signed Indiana’s RFRA into law, on March 27, 2015, the Arkansas legislature voted to enact its own religious freedom legislation known as the “Conscience Protection Act”, and the bill is currently before Governor Asa Hutchinson.

While the Arkansas Governor is set to consider religious freedoms and LGBT discrimination, Arkansas’s Attorney General has been battling the Department of Labor (DOL) in another issue impacting LGBT employees. On March 26, 2015, in Texas v. United States, N.D. Texas No. 7:15-cv-00056-O, Judge O’Connor granted an injunction to Texas, Arkansas, Louisiana, and Nebraska to temporarily halt the DOL’s Final Rule revising the definition of “spouse” under the Family and Medical Leave Act (FMLA).

The DOL’s Final Rule took effect on March 27, 2015 and changed the definition of “spouse” to include individuals in same-sex marriages if the marriage was valid in the place it was entered into regardless of where they live. The Final Rule reads as follows:

Spouse, as defined in the statute, means a husband or wife. For purposes of this definition, husband or wife refers to the other person with whom an individual entered into marriage as defined or recognized under state law for purposes of marriage in the State in which the marriage was entered into or, in the case of a marriage entered into outside of any State, if the marriage is valid in the place where entered into and could have been entered into in at least one State. This definition includes an individual in a same-sex or common law marriage that either:

(1) Was entered into in a State that recognizes such marriages; or

(2) If entered into outside of any State, is valid in the place where entered into and could have been entered into in at least one State.

29 C.F.R. § 825.102. This change enables eligible employees in legal same-sex marriages to take FMLA leave to care for a spouse with a serious medical condition. The Final Rule no longer looks to the laws of the state in which the employee resides but rather relies on the laws of the jurisdiction where the marriage was entered into–i.e. the place of celebration.

Texas law, similar to Ohio, does not recognize same sex marriage. Texas, joined by Arkansas, Nebraska, and Louisiana, argued that the DOL exceeded its jurisdiction by requiring them to violate the Full Faith and Credit Statute and/or state law prohibiting recognition of same-sex marriages from other jurisdictions. Texas argued that the Final Rule would require it to violate state law which prohibits it from giving any legal benefits asserted on the basis of a same-sex marriage. Judge O’Connor also relied on Section 2 of the Defense of Marriage Act (DOMA) to hold that Congress intended to preserve a state’s ability to define marriage differently than another state or jurisdiction. Finding that the Final Rule would require Texas agencies to recognize out-of-state same-sex marriages in violation of state law, Judge O’Connor temporarily halted the application of the Final Rule pending a full determination of this matter on the merits.

In these four states, Judge O’Connor’s decision prevents employees in same-sex marriages from receiving the benefits afforded heterosexual married couples until the issue is resolved through legal channels. However, employers are not prohibited from granting family leave benefits to qualifying employees to care for a loved one. Despite the decision—only applicable in four states—the Final Rule is currently in effect. For this reason, employers should proceed in accordance with the DOL’s regulation and fulfill its obligations to its LGBT employees by revising their family and medical leave policies and providing FMLA benefits to employees in legal same-sex marriages.

ARTICLE BY

Anjali Chavan
Sadhna G. True
Dinsmore & Shohl LLP

Supreme Court: DOL Can Flip-flop on its Interpretation of Its Own Regulations

Godfrey & Kahn S.C. Law firm

In 2010, the United States Department of Labor (DOL) issued an “Administrator’s Interpretation” stating that DOL would no longer consider employees who perform duties typical of mortgage loan officers to be exempt from the Fair Labor Standards Act’s overtime pay requirements.  This particular ruling revolved around the FLSA’s exemption for administrative employees.

Supreme court DOL FLSA

The DOL’s 2010 stance represented a change of course, as DOL had previously issued an “Opinion Letter” in 2006 stating that mortgage loan officers were generally exempt from the FLSA’s overtime pay requirements under the administrative exemption.  Litigation ensued following the 2010 Administrator’s Interpretation.  The focus of that litigation was a rather technical issue:  Should DOL have followed the formal rulemaking process before it could flip-flop on its interpretation of its own regulations?  You can read more about the details of the litigation here.

On Monday, March 9, 2015, the United States Supreme Court ruled that DOL was not required to follow the formal rulemaking process whenever it took a position that was contrary to previous guidance issued by DOL.

Why does this ruling matter to employers of mortgage loan officers?  Those businesses should classify those employees as non-exempt and evaluate their compensation structures immediately to comply with DOL’s interpretation of the administrative exemption.  Otherwise, these employers run the risk of DOL enforcement actions and private litigation.  Of course, these employers can disregard the DOL’s interpretation and rely on individual merits of their classifications, but they would do so at their peril.

Why does this ruling matter to employers generally?  Based on the Court’s ruling, DOL can arguably change its tune about any interpretation of its own interpretive regulations without any warning to employers.  An emboldened DOL could revisit regulatory interpretations that currently favor employers and flip those interpretations on their head, without warning.  More importantly, the Court’s ruling was not limited to the DOL, which means that other federal administrative agencies (e.g., OSHA) could follow suit, leaving employers with little recourse to challenge such changes of heart.

ARTICLE BY

M. Scott LeBlanc
Rufino Gaytán
OF
Godfrey & Kahn S.C.

DOL Issues Final Rule Amending FMLA Definition of “Spouse” to Include Same-Sex Marriages

The U.S. Department of Labor has issued a final rule amending the regulatory definition of “spouse” under the Family and Medical Leave Act (“FMLA”).  We earlier reported on the DOL’s proposed rule to this effect, which is now final and will become effective on March 27, 2015.

The amendment changes the definition of “spouse” to include individuals in same-sex marriages if the marriage was valid in the place it was entered into regardless of where they live.  Before the new rule was issued, the FMLA and its accompanying regulations defined “spouse” as a husband or wife as recognized under the laws of the state in which the employee resides.  The new definition of spouse instead looks to the law of the jurisdiction in which the marriage was entered into and expressly encompasses same-sex married couples.  The final rule thus adopts a “place of celebration” rule rather than a “state of residence” rule for the definition of “spouse” under the FMLA.

According to the DOL, the amended regulatory definition of spouse permits “eligible employees in legal same-sex marriages [to] be able to take FMLA leave to care for their spouse or family member, regardless of where they live.”  The DOL has also suggested that the new rule will reduce the administrative burden on multi-state employers, who no longer have to consider an employee’s state of residence and the laws of that state in determining the employee’s eligibility for FMLA leave.

The new rule was prompted by the United States Supreme Court decision in United States v. Windsor, which found unconstitutional those provisions of the Defense of Marriage Act that prohibited federal recognition of same-sex marriages.

Some of the other features of the new rule include:

  • The new rule encompasses an employee in a same-sex marriage entered into abroad as long as the marriage is valid in the place it was entered into and could have been entered into in at least one state in the United States.

  • The new rule encompasses employees in a common law marriage as long as the common law marriage became valid in a state that recognizes such common law marriage.

  • An employee in a legal same-sex marriage can now take FMLA leave to care for his or her stepchild whereas before, an employee in a legal same-sex marriage could only take FMLA leave to care for his or her stepchild for whom the employee stood in loco parentis.

  • Similarly, an employee can now take FMLA to care for his stepparent who is the employee’s parent’s same-sex spouse, even if the stepparent never stood in loco parentisto the employee.

ARTICLE BY

Shira Forman
Sheppard, Mullin, Richter & Hampton LLP