On Monday, we reviewed some of the rulemaking initiatives identified by the National Labor Relations Board (“NLRB”) in the Trump Administration’s Spring 2018 Unified Regulatory and Deregulatory Actions (Agenda). In this post, we take a look at some highlights from the Agenda for the Department of Labor (“DOL”) – particularly the Wage and Hour Division – and the Equal Employment Opportunity Commission (“EEOC”).
Initiatives from the Department of Labor
The Spring 2018 Agenda also included many rulemaking initiatives from the DOL. One item of note is the DOL’s intent to issue a Notice of Proposed Rulemaking to “clarify, update, and define” the requirements for “regular rate of pay” under Section 7(e)(2) of the Fair Labor Standards Act (“FLSA”). The FLSA requires that employees who work more than 40 hours in a work week be paid overtime at a rate of time and a half their regular rate of pay. The FLSA explains that the regular rate of pay often includes more than just the employee’s hourly rate where the employee receives other types of compensation, such as bonuses or commissions. But it is not always clear exactly which types of compensation must be factored into determining the regular rate of pay and how it should be calculated. The DOL has set a proposed deadline of September 2018 to issue its Notice of Proposed Rulemaking.
The Spring 2018 Agenda also includes a timeline for issuing the Notice of Proposed Rulemaking for changes to the DOL’s controversial White Collar Exemptions Rule. As you may recall, the DOL promulgated the final White Collar Exemptions Rule in May 2016 and the Rule was supposed to take effect as of December 1, 2016. In that Final Rule, the DOL more than doubled the threshold salary to be classified as an exempt employee from $23,660.00 to $47,476.00. Shortly after the DOL passed the Final Rule, it was challenged in the Eastern District of Texas, where a federal judge invalidated the rule as failing to align with Congress’s intent for the classification of exempt employees. Specifically, the judge determined that the DOL exceeded its authority by setting a minimum salary level that eclipsed the assessment of an employee’s job duties to determine exempt status.
As a result of this decision, the DOL initiated an RFI in July 2017 to seek comments from the regulated community on how the White Collar Exemptions rule should be revised. The RFI comment period closed on September 25, 2017. In the Fall 2017 Agenda, the DOL projected that it would issue a Notice of Proposed Rulemaking for the new White Collar Exemptions Rule by October 2018. The 2018 Agenda now reflects January 2019 for the Notice of Proposed Rulemaking, but it could definitely shift again in the Fall 2018 Agenda as evidenced by the prior change in timeline.
In addition, the Spring 2018 Agenda reiterates the DOL’s intent to issue a new Notice of Proposed Rulemaking regarding treatment of tips under Section 3(m) of the FLSA. As explained in the description of the rulemaking provided in conjunction with the Agenda, the DOL notes that it intends to align its regulations on tips with the amendments made to the FLSA by the Consolidated Appropriations Act. The Consolidated Appropriations Act amended the FLSA to explicitly prohibit employers (through managers and supervisors) from sharing in a tip pool with tipped employees, whether or not the employer takes a tip credit, and rescind the limitation on sharing tips with traditionally non-tipped employees where no tip credit it taken. The Notice of Proposed Rulemaking would update the current regulations to reflect this change in the law. The proposed timeline for the Notice of Proposed Rulemaking is August 2018.
Initiatives from the Equal Employment Opportunity Commission
A significant undertaking on the EEOC’s docket is its rulemaking to amend the current regulations on wellness programs to address the interaction of such programs with the Americans with Disabilities Act (“ADA”) and the Genetic Information Non-Discrimination Act (“GINA”). Both laws protect employees from having to disclose medical and genetic information and prohibit employers from requesting such information in most instances. However, there is an exception when such information is related to a wellness program, as long as the employee provides that information voluntarily. In July 2016, the EEOC issued regulations under the ADA and GINA related to wellness programs, and specified when participation in those programs, including providing medical information, would be considered voluntary. Specifically, the regulations allowed employers to encourage participation by using penalties or incentives up to 30% of the cost of self-only coverage.
In August 2017, however, the District Court for the District of Columbia ordered the EEOC to reconsider its regulations after they were challenged by the AARP. The AARP argued that incentives of up to 30% effectively made participation involuntary. In assessing the AARP’s claims, the Court found the incentive level arbitrary and without sufficient support. The Court did not vacate the applicable regulations but sent the EEOC back to the drawing board. In the Spring 2018 Agenda, the EEOC projects issuing a Notice of Proposed Rulemaking in January 2019 to revise these regulations and sufficiently address the concerns of the Court.
Although many of the items on the Spring 2018 Agenda include a specific timeline, its important to remember that all these dates are flexible and fluid, and often shift throughout the rulemaking process. Nevertheless, if promulgated, these rules will have a significant impact on the regulated community. Thus, we will continue to track their progress and keep you apprised of any significant developments. The next semi-annual Agenda will be Fall 2018.