Trump Proposes a $2.5 Billion Cut to the Dept. of Labor’s Budget and to Eliminate Funding for Labor Initiatives and the Chemical Safety Board

By Kara M. Maciel and Eric J. Conn

The Trump Administration submitted a blueprint budget for 2018 to Congress proposing $2.5 Billion in cuts to the U.S. Department of Labor’s (“DOL”) operating budget.  The President’s proposed budget expressly calls for reduced funding for grant programs, job Budget 1training programs for seniors and disadvantaged youth, and support for international labor efforts.  It also proposes to entirely defund and eliminate the U.S. Chemical Safety and Hazard Investigation Board (“CSB”) – an independent, federal, non-enforcement agency that investigates chemical accidents at fixed facilities.  The budget plan also purports to shift more funding responsibility to the states with labor related programs.  Finally, although less explicit, the budget blueprint appears to deliver on promises from Trump’s campaign trail that rulemaking and regulatory enforcement efforts under the myriad laws and regulations enforced by the sub-agencies, such as the Wage and Hour Division and OSHA would be slashed.

These proposed budget cuts at DOL and other agencies are all part of a plan to offset the White House’s intent to increase defense and security spending by $54 billion.  Overall, Trump requested $1.065 Trillion in total discretionary spending, with $603 billion going to Defense.

The proposal would shrink DOL’s budget to $9.6 Billion – down 21% from the $12.2 Billion budget for 2017. Trump’s planned reductions announced on March 16, 2017 – while not really surprising in the context of his view toward federal spending on non-defense agencies – would have a seismic impact Continue reading

Trump Picks Fast Food Restaurant CEO Andrew Puzder as Labor Secretary: Seismic Shift Is Anticipated in Agency’s Rulemaking and Enforcement

By: Andrew J. Sommer

President-elect Donald Trump has chosen Andrew Puzder as his Secretary of Labor, according to Trump’s transition team. Puzder is the CEO of CKE Holdings, the parent company of Carl’s Jr. and Hardee’s, and has been a vocal critic of the Obama Labor Department’s overtime regulations and efforts to increase the federal minimum wage. As labor secretary, Puzder will oversee the federal apparatus that investigates violations of minimum wage, overtime and workplace safety laws and regulations.

An increase in the federal minimum wage and an expansion in overtime eligibility have been priorities for the outgoing Secretary of Labor Thomas Perez. On Perez’s watch, the DOL has issued new overtime regulations increasing the minimum salary threshold level in order to qualify an employee as exempt from overtime. Puzder has denounced this new overtime rule, the status of which is presently uncertain after a Texas federal court temporarily blocked the rule from taking effect. The U.S. Court of Appeals for the Fifth Circuit has just granted the DOL’s request to expedite its appeal from the preliminary injunction order. The appeal is unlikely to be decided before Donald Trump is inaugurated as the next president on January 20, 2017.

Accordingly, under Puzder’s leadership, the DOL could very well withdraw the pending appeal before a decision is issued by the Fifth Circuit and otherwise not support the new overtime rule. Even if the overtime rule eventually takes effect, Puzder’s arsenal will include the authority to engage in rulemaking to roll back or modify the overtime rule, consistent with the notice and comment process under the federal Administrative Procedures Act. In an op-ed piece earlier this year in Forbes, Puzder said that the overtime regulation will “add to the extensive regulatory maze the Obama Administration has imposed on employers, forcing many to offset increased labor expense by cutting costs elsewhere.” He expressed the opinion that this cost cutting would result in reduced opportunities, bonuses, benefits and promotions.

Other immediate measures that Puzder could take to shift or reverse the direction of the DOL would be to modify interpretive guidance issued under the Obama Administration. For instance, Puzder will likely modify an administrative interpretation by the DOL’s Wage and Hour Division regarding the joint employer doctrine. Under Obama, the DOL has cracked down on employee misclassification and been vocal about its belief that most workers should be treated as employees, insinuating that in a majority of cases, it would hold employers accountable for the specific obligations of an employer-employee relationship. The Wage and Hour Division has offered an administrative interpretation under the Fair Labor Standards Act and Migrant and Seasonal Agricultural Worker Protection Act that broadened the definition of joint employment. Under that doctrine, two employers may be responsible for the violations of each other because of how they jointly use the same employees or because of the control an employer exercises over the employees of an intermediary employer such as a contractor or staffing agency.

Puzder’s authority to impact regulatory and enforcement actions will extend to the DOL’s administration of guest worker programs, allowing foreign nationals to immigrate to the United States and work on a temporary basis, as well as the DOL’s coordination with the Department of Homeland Security over the enforcement of immigration laws in the workplace. It is uncertain what will happen under a Labor Secretary Puzder, whose past immigration stance is at odds with the President Elect’s. In an op-ed piece Puzder authored in The Wall Street Journal last year, he counseled Republican presidential candidates to come up with a vision of how to deal with immigration, including the 11 million undocumented workers already in the country. He supported a “path to legal status” that would be “short of citizenship” so long as the undocumented pass a background check, pay a fine and learn English, among other measures.

Ultimately, employers may benefit most from Puzder’s authority to reallocate agency resources away from agency enforcement actions for labor law violations. Under Obama, the Wage and Hour Division has been very active in enforcing labor laws and investigating industries and workplaces with a history of labor law violations. Puzder could slow down enforcement and conduct fewer investigations. The first few months of a Puzder Labor Department may be telling as we continue to read the tea leaves to assess how employers will be affected by the change in administration.

District Court Judge Grants Injunction Putting DOL Overtime Rule on Hold

In late September 2016, twenty-one states led by Texas and Nevada, along with the U.S. Chamber of Commerce and other business groups, challenged the U.S. Department of Labor’s (“DOL”) new overtime exemption rule set to take effect on December 1, 2016, and sought a nationwide injunction preventing the rule from taking effect.  stop-sign-2

The states argued that the DOL unconstitutionally overstepped its authority by establishing a federal minimum salary level that more than doubled the minimum salary threshold required to qualify for the Fair Labor Standards Act’s (“FLSA”) white collar exemption, and that the rule would result in a substantial increase in employer operating costs. [1]  In particular, the states took issue with the policy behind the rule change, arguing that salary level alone does not reflect the type of work an employee performs, and that the DOL’s regulation disregarded the text of the FLSA by imposing a salary threshold without regard to whether an employee actually performs bona fide executive, administrative or professional duties.

On Tuesday November 22, 2016, U.S. District Judge Amos Mazzant of the Eastern District of Texas granted the states’ preliminary injunction, stopping (or at least delaying) the DOL from implementing the rule that would have expanded overtime protections to more than 4 million employees nationwide.

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Don’t Wager Your Company on Incorrect Wages in 2016

As we transition into 2016, it is essential that employers are aware of and plan for changes to employee wage requirements and the increased emphasis on wage and hour compliance. For at least the past decade, the number of wage and hour claims filed in federal courts has increased exponentially and 2016 looks like it will be much of the same with fuel for a significant rise. In Fiscal Year (FY) 2000, employees filed only 1,935 claims for violations of the Fair Labor StandardIncreasing Money Graphs Act. At the end of FY 2014, that number had increased by more than 420% to 8,160 wage and hour lawsuits filed in federal court. In FY 2015, the trend continued with 8,781 wage and hour cases based on data released by a national law firm from the Federal Judicial Center. This represents a 7.6% rise in these types of suits from 2014. With employees filing wage and hour claims on a much more frequent basis, compliance is of even greater importance and 2016 looks to present some additional challenges on that front.

An Increasing Minimum Wage

Last year, many employers saw an increase in the required minimum wage at the state level, as well as a rise at the federal level for federal contractors. For many states and federal contractors, 2016 will bring another round of higher minimum wages. Continue reading

Federal Regulatory Activity Remains Active for Employers in 2016

2015 has been a busy year for government agencies in terms of Labor & Employment Rulemaking, and this trend will only continue into the New Year. Thus, as the holiday season swings into full gear and the end of 2015 is right around the corner, we want to take this opportunity update you on important Labor & Employment regulations rules that are set to be released in the coming months.

Rules issued by the U.S. Department of Labor’s Wage and Hour Division

  • Revisions to Overtime Regulation. Department of LaborAs we have previously explained here, the Wage & Hour Division (WHD) of the U.S. Department of Labor (DOL) has released proposed regulations that will dramatically expand the number of workers who could be eligible for overtime. Specifically, the WHD has proposed raising the minimum salary threshold for employees to be exempt from overtime from the current level of $455 per week to $970 per week, or $50,440 per year. In addition, the WHD is considering whether it should modify the existing “duties” test in order for a worker to be exempt from overtime. There have been nearly a quarter of a million comments submitted to the WHD regarding these new regulations. It is currently anticipated that the WHD will issue its final regulations in the summer of 2016.
  • Impact of the Use of Electronic Devices by Nonexempt Employees on Hours Worked. The DOL plans to issue a Request for Information (RFI) to gather information about employees’ use of electronic devices to perform work outside of regularly scheduled work hours and away from the workplace, as well as information regarding last minute scheduling practices being utilized by some employers that are made possible in large part by employees’ use of these devices. While this is not intended to become an actual rule at this time, the information gathered may be used to support some form of guidance in conjunction with the overtime regulation. The RFI is expected that to be issued in February 2016.
  • Regulations Requiring Federal Contractors to Provide Paid Sick Leave. Executive Order 13706 requires federal contractors and all levels of subcontractors to provide paid sick leave at the rate of one hour per every 30 hours worked, up to 7 days annually. Contractors include any company merely leasing space from the federal government such as a day care center in a federal office building. The Executive Order specifies the purposes for which this leave must be available, which include both the employee’s health and those of their family. The terms of when this leave can be used are taken directly from the Healthy Families Act, including making the leave available to deal with domestic violence. It is anticipated that a proposed regulation implementing this Executive Order will be issued in February 2016.

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