By Lisa Nagele-Piazza, J.D., SHRM-SCP
November 12, 2019
NEW ORLEANS—Deregulation has been a major priority for the U.S. Department of Labor (DOL) during President Donald Trump's administration, and the federal government wants to make processes less burdensome for employers, according to DOL officials.
Many DOL regulations have "literally not been updated since the 1950s or 1960s, and yet we all know that the workplace has changed dramatically," said Solicitor of Labor Kate O'Scannlain during a Nov. 8 session of the American Bar Association's 13th Annual Labor and Employment Law Conference.
The DOL is looking for ways to lower compliance costs for employers, O'Scannlain said, but there are regulations that the department is not willing to change, such as safety standards.
Cheryl Stanton, the DOL's Wage and Hour Division administrator, noted that the department is still focused on enforcement. "We have not changed our commitment to low-wage workers who are in vulnerable situations," she said. The division is also focused on community outreach, she said, to help employers comply with rules and regulations and to ensure that workers understand their rights.
Here are some of the DOL's top priorities, according to O'Scannlain and Stanton.
1. Defending the New Overtime Rule
The DOL issued its highly anticipated federal overtime rule in September. Under the final rule, employees who make less than $35,568 must be paid overtime premiums starting Jan. 1, 2020. Among other changes to the federal Fair Labor Standards Act's (FLSA's) "white-collar" exemptions from overtime pay, the new rule also raised the salary cutoff for highly compensated employees.
Worker advocates have argued that the threshold still isn't high enough. "I am happy that it went up, obviously," said Michele Fisher, an attorney with Nichols Kaster in Minneapolis. But the federal level is so low that many states are working to increase their minimum exempt salary even higher, she said. "What you are going to see from the plaintiffs' bar … is us bringing state actions."
O'Scannlain said the department carefully crafted the regulations and is confident about the final rule. "We are ready to defend them," she said.
2. Expanding Apprenticeship Programs
In June, the DOL announced a proposed rule to expand apprenticeship programs and help close the skills gap, O'Scannlain noted. The rule would create a process to establish industry-recognized apprenticeship programs (IRAPs), which are customizable apprenticeship models that the DOL has called "major milestones in the continuing effort to expand apprenticeships in the United States."
The proposed apprenticeship programs would be available to certified industry groups, schools, nonprofits and unions, and would be largely free from regulatory oversight, but would not change any requirements of the current DOL-regulated apprenticeship programs.
3. Updating Fluctuating Workweek Rules
The DOL is also working on proposed updates to the fluctuating workweek method of calculating overtime. Employers can use the fluctuating workweek method under the FLSA to calculate overtime pay for salaried nonexempt employees who work hours that vary each week. The recently released proposal would cover more workers and provide employers with greater flexibility by letting them pay bonuses and other incentive-based compensation under this method. The public may submit comments on the proposal by Dec. 5.
4. Changing Tip-Sharing Rules
On Oct. 7, the DOL announced a proposed rule about tip sharing under the FLSA. The proposal would make it easier for employers to require "front-of-the-house" employees—such as servers and bartenders—who earn at least the minimum wage and customarily receive tips to share those gratuities with cooks, dishwashers and other "back-of-the-house" workers who aren't usually tipped. The proposed rule would prohibit employers from keeping employees' tips and is open for public comment until Dec. 9.
5. Updating the 'Regular Rate' Calculation
Another proposed FLSA update would change the definition of the "regular rate" of pay, which is used to calculate overtime premiums. The regular rate includes hourly wages and salaries for nonexempt workers, most bonuses, shift differentials, on-call pay, and commissions. However, it excludes health insurance, paid leave, holiday bonuses and other discretionary bonuses, and certain gifts.
Many employers aren't sure if certain perks must be included in the regular rate of pay. So instead of risking a lawsuit, some are choosing not to offer competitive benefits. Employers may feel more comfortable offering additional rewards if the proposed changes are finalized.
6. Clarifying the Joint-Employer Rule
The DOL also proposed a multifactor test to determine whether businesses are joint employers and share liability for FLSA wage and hour violations. The proposal aims to provide clarity for businesses, which likely won't be deemed joint employers if they stay out of the day-to-day employment decisions of their contractors and franchisees.
7. Allowing Online Benefit Plan Disclosures
An Employee Benefits Security Administration proposal would allow employers to provide benefit plan disclosures online rather than by mail. O'Scannlain said this change could result in a cost savings of about $2.5 million over 10 years. The rules would apply to plan disclosures required by the Employee Retirement Income Security Act, and the DOL has posted a fact sheet on the proposed e-disclosure safe harbor. The comment period closes on Nov. 22.
Stanton said the DOL wants to hear from employers and workers on these proposals because comments help the department shape regulations.
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Source: Society for Human Resource Management (SHRM)