Tag Archives: DOL

Labor Policy Changes Under the Trump Administration


Most of the news about the Trump Administration in recent days has involved developments arising out of the special counsel’s investigation. But as Labor Day approaches, it is worth examining what the administration has accomplished in the labor arena. Many stories about changes in regulations are getting less media attention than they might have, had we not had daily stories about sensational prosecutions or pleas and inflammatory tweets about Russia’s meddling and campaign finance violations.

Here are a few of the more significant changes in labor policy under President Trump:

DOL seal.pngFair Labor Standards Act: Although the 80-year-old Fair Labor Standards Act remains largely unchanged, the Department of Labor has again started using DOL opinion letters, which the Obama Administration had abolished. Opinion letters provide guidance that employers can rely on for interpretation of the regulations, so returning to this practice is a help. Moreover, many of the Bush Administration opinion letters have been reinstated.

Furthermore, in June 2017 the Trump Administration withdrew the Obama-era interpretation on joint employment. The joint employment interpretation—designed to make large franchisors liable for the practices of independently owned franchisees—was roundly criticized by employers, so the return to the former DOL interpretation of when joint employment arises is a welcome relief for employers.

The Trump Administration has also rolled back rulemaking under the white collar overtime exemption and the tip pooling regulations. In both cases, DOL is now attempting to provide employers with broader exemptions and greater relief from regulation.

Still, any changes to current FLSA regulations are likely to engender future litigation, so even if DOL’s Wage & Hour Division issues favorable changes, employers will have a long time to wait until there is certainty in this area.

Broader Range of Health Plans for Small Businesses: As a result of a Trump executive order seeking to reverse or limit portions of Obamacare that can be addressed by regulation, DOL has proposed letting more small firms and individuals form association health plans (AHPs). Large businesses have the market power to get good discounts from health care providers; the proposal is intended to let small businesses, including self-employed workers, pool their populations to get similar discounts through an AHP. Under this proposal, companies or individuals involved in the same type of business or located in the same region could band together to form AHPs.

Any attempts to broaden access to healthcare insurance should be encouraged, even if they do not satisfy all the benefit coverage requirements or other restrictions of Obamacare. More choice in insurance options will help employers of all sizes attract and retain employees.

Union Negotiations: The Trump Administration has pushed federal agencies with unionized workforces to reopen collective bargaining agreements with their public unions. Agencies have also been directed to move swiftly to fire poor performers. The Administration argues it is trying to streamline costly government bureaucracy and improve accountability of the federal workforce.

As with changes under the FLSA, litigation over these changes is likely. (In fact, on August 25, 2018, just as I was finalizing this post, a district court judge overturned some of the executive orders implementing them.)

In Janus v. American Federation of State, County, and Municipal Employees, Council 31 (Sup. Ct. June 27, 2018), the Supreme Cout ruled against public unions in a different context (deciding that public employees could not be forced to pay union dues). This decision weakens public unions, and arguably indicates possible Supreme Court support for government efforts to push back against such unions. However, it remains to be seen whether the Court would help the Trump Administration roll back previously negotiated collective bargaining agreements.

And nothing in Janus changes how the NLRB deals with issues between private employers and their unions, which would be a more helpful area of focus during the next two years of the Trump Administration.

nlrb logoRestrictions on Employee Use of Employer Email: One helpful development for private employers that the Trump Administration has undertaken is that the National Labor Relations Board (NLRB) has invited briefs on whether it should overrule Purple Communications, Inc., 361 NLRB 1050 (2014). The Board held in that case that employees had a presumptive right to use employer email systems on nonworking time for organizing and other protected communications under the National Labor Relations Act.  In Purple Communications, the Board overruled its earlier decisions holding that employers could maintain union-neutral policies regarding permissible uses of their email systems, even if these policies had the incidental effect of limiting use of those systems for union–related communications. Presumably, the NLRB is now considering a return to the holding of those prior cases.

This and other NLRB actions could have far-ranging impact on employers’ efforts to maintain union-free workplaces. However, NLRB policy in recent decades has tended to shift with the party affiliations of the five NLRB members, so whatever the current administration does could once again be overruled.

Application of Religious Freedom Principles to the Workplace: DOL is attempting to make it easier for federal contractors to claim religious beliefs as a defense against anti-LGBTQ discrimination complaints. Recent directives state that the federal government has a duty to protect religious exercise, not to impede it. The Administration has instructed the Office of Federal Contract Compliance Programs (OFCCP) not to condition federal contracts “upon a recipient’s willingness to surrender his [or her] religiously impelled status.” Rather, faith-based organizations should be permitted to compete on a level playing field for federal contracts.

There will be a rulemaking process, so the impact of these directives may not be known for some time.

* * * * *

All in all, there have been some helpful changes at the DOL, the NLRB, and other labor policy-making agencies. However, much of the Obama Administration’s overreach in the labor arena remains in place.

Employers should encourage the current administration and Congress to pursue business-friendly policies designed to keep the economy growing. Perhaps the likelihood of continued media attention on the special prosecutor’s investigation will enable more good regulatory work to move labor laws and policy in directions conducive to business and employment growth.

But employers should also remain mindful of the need to comply with labor laws and regulations currently in effect.

What labor policies would you like to see changed and why?

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Proposed Changes to Overtime Regulations Don’t Update Wage Laws Sufficiently


Obama SOTUIn his State of the Union speech on January 28, 2014, President Obama promised to use his regulatory authority and executive orders to bypass Congress when they could not reach a deal. He has begun to follow through aggressively on this promise in the labor arena.

This call for new regulations to cut back on the FLSA exemptions from overtime is the subject of this post.

imagesIn general, the FLSA requires overtime pay for workers who work more than 40 hours/week, unless they fit into one of several categories of employees who are “exempt” from FLSA requirements. The largest exempt categories are for executive, administrative, and professional employees.

In his March 13 memorandum, President Obama stated:

. . . regulations regarding exemptions from the Act’s overtime requirement, particularly for executive, administrative, and professional employees (often referred to as “white collar” exemptions) have not kept up with our modern economy. Because these regulations are outdated, millions of Americans lack the protections of overtime and even the right to the minimum wage.

Therefore, I hereby direct you [DOL] to propose revisions to modernize and streamline the existing overtime regulations. In doing so, you shall consider how the regulations could be revised to update existing protections consistent with the intent of the Act; address the changing nature of the workplace; and simplify the regulations to make them easier for both workers and businesses to understand and apply.

Labor experts expect that the Department of Labor will increase the salary threshold for these exempt workers from $455/week to somewhere in the neighborhood of $970/week.

I’m not adverse to an increase in the salary threshold. The current threshold of $455/week has been quite low, equating to $24,000/year, and was last increased ten years ago.

However, I have two concerns about changing the FLSA regulations—the first that it won’t improve workers’ wages as the President said, and the second that it doesn’t get at the heart of the problems with the FLSA.

1.  Businesses will change their hiring practices in response

An increase in the salary threshold of the anticipated magnitude will greatly expand the number of workers eligible to receive overtime pay. But businesses will not stand still in response.

Rather than increase the overtime wages they have to pay, many businesses are likely to change the way they structure jobs. They may pay their supervisory workers overtime and hire fewer non-supervisory workers to offset the overtime paid to the supervisors. They may hire more workers, but work them fewer hours to avoid the extra cost of overtime. They may cut back everyone’s hours to keep labor costs the same. Businesses are not likely to let an increase in overtime pay increase their cost structures increase without any response.

As one commentator stated,

“Employers should begin to consider, however, how increases to the required salary level and revisions to the duties tests under the “white collar” exemptions may impact long-standing staffing and compensation models for a wide range of employees.”

These changes may or may not be good for the economy. But if President Obama thinks more workers will automatically get “the protections of overtime” with an increase in the salary threshold, he is wrong. Some workers may find their pay cut when their hours are reduced.

2.      FLSA is out of date in many respects

My second concern is that we are missing a big opportunity to improve our wage laws overall. The FLSA was adopted in 1938 in response to the Great Depression. The labor market has changed substantially in the last 76 years, and many aspects of the FLSA regulations do not fit today’s labor market.

One issue that many employers and employees alike have requested is additional flexibility on the definition of “work week” and the ability to offer “compensatory time off” in lieu of overtime wages. For example, defining a two week period of 80 hours, rather than a single week of 40 hours, and permitting employees and employers to agree to flexible schedules, or occasional fluctuations, across that longer period of time before overtime is payable.

Moreover, we no longer live in a world where most employers do all their work at the employer’s place of business. Many workers do some work from home, or at least answer work-related calls and emails. Policing overtime work is increasingly difficult, and if the new regulations do not address the problems of monitoring employees’ working hours will set employers up to pay for time they never intended employees to work.

Any regulatory change that only addresses the narrow issue of the salary threshold for white collar exemptions is missing a huge opportunity to update one of our nation’s core labor laws.

Many of the broader changes in the FLSA would require statutory change, and the President cannot address these problems unilaterally. But it would be a big step forward if President Obama worked with Congress to bring the FLSA into the 21st century, offering changes that employers want in addition to increasing overtime and minimum wage levels as Democrats want. Rather than unilateral executive actions, we need a bipartisan approach to updating work rules across the board.

What aspects of the FLSA do you think are out of date?

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Complex Impact of DOMA Decision on Employee Benefit Plans


In mid-June, I wrote about the potential impact of the Supreme Court’s same sex marriage opinion on employers. Well, now we know what that impact is – or rather, now we know what we still don’t know.

The Perry v. Hollingsworth decision from California is likely to only impact employers in California. But the U.S. v. Windsor decision holding that Section 3 of the Defense of Marriage Act (DOMA) is unconstitutional will impact employers across the nation. Unfortunately, the Windsor decision raised as many questions for employers as it answered.

Because the Court only overturned Section 3 of DOMA, the rest of DOMA remains in place. Most importantly, the Court did not mandate that same-sex marriages be recognized, nor did it overturn Section 2 of DOMA. Section 2 provides that the states are not required to give effect to same-sex marriages entered into in other states. Therefore, the federal laws related to marriage must still accept each state’s definition of marriage.

What does this mean for employers? We are only now beginning to figure this out. We will need to wait for guidance from the myriad federal agencies that regulate and enforce the federal laws related to marriage. In essence, however, it means that employers will have to adapt to a variety of definitions of marriage in different states.

Here are a few of the many recent articles on the impact of the Windsor decision on employers: from the Littler law firm, from SHRM, and from two benefits consultants (Towers Watson and Aon Hewitt).

Major issues after Windsor include:

  • Which state’s law should an employer consider – the state where the employee resides, the state where the employee was married, or the state where the employee works? The answer may vary depending on what federal right or benefit is involved. Moreover, keep in mind that Windsor said nothing about civil unions, domestic partnerships, or anything other than that where same-sex marriages are recognized by state law, they must be recognized for federal purposes.
  • Can multi-state employers standardize on a single practice for their benefit plans (probably using the most liberal definition of marriage and spouse), or will they have to have multiple methods of administering their plans, depending on state law? Most likely, they will a complex maze of plan administration – because for some purposes same-sex partners who have married will be spouses and entitled to certain benefits, and sometimes same-sex partners (whether married or unmarried) will be prohibited from claiming other benefits.
  • What differences will there be under ERISA’s requirements for pension plans and welfare plans? As with most benefit plan issues, the starting points are not only the requirements set forth in statutes and regulations, but also the language of the benefit plan documents. Spouses have more rights under pension plans (for example, for purposes of spousal notice requirements, mandated survivor benefits, and qualified domestic relations orders) than under welfare plans (where definitions in plan documents and insurance contracts may adopt different definitions than required in pension plans).
  • When does Windsor become effective? Is the Windsor decision retroactive? In other words, how soon must employers have systems in place to accurately record same-sex marriages, and must employers un-do and re-do a variety of past benefit plan actions, such as distributions? That’s why employers need prompt guidance from the IRS, DOL, SSA, and other regulatory agencies.

Employers can assume that the Obama Administration will issue guidance that favors quick, and maybe even retroactive, recognition of same-sex marriages. So HR professionals and corporate executives involved with benefit plans need to stay on alert. Read the linked articles in this post for a good start in understanding the specific complications the Windsor decision has raised.

What issues has the Windsor decision raised for your benefit plans?

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