Foxx Vows Changes to Overtime Rule as Chair of House Committee

But will it be too late to turn back the clock on the overtime rule?

Allen Smith, J.D. By Allen Smith, J.D. September 21, 2016
Foxx Vows Changes to Overtime Rule as Chair of House Committee

The clock is ticking on efforts to fend off the overtime rule, despite 21 states' lawsuit against the Department of Labor (DOL) and, in a separate effort, small businesses seeking a delay in the effective date. Unless the states can block it or the National Federation of Independent Business can get it delayed, the rule is less than three months away from taking effect on Dec. 1.

However, Rep. Virginia Foxx, R-N.C., who is expected to chair the U.S. House of Representatives Education and the Workforce Committee in the 115th Congress after Rep. John Kline, R-Minn., retires, isn't giving up the fight.

Foxx would spearhead a number of initiatives, including:

  • Challenging the overtime rule.
  • Opposing the National Labor Relations Board's (NLRB's) broadened joint employer standard.
  • Fighting the "ambush" election rule.

Overtime Rule

First, she'd like to tackle the DOL's new regulations on overtime, which she told SHRM Online "are another egregious example of the burdensome regulations that continue to hamper our economic recovery and hold American families back. Once again, unelected Washington bureaucrats have harmed the employees they claim to support by removing flexibility in the workplace, which could lead to cutting the pay or limiting the hours of workers."

But changing the rule after it takes effect might prove difficult. "The leadership change will not happen until at least a month after the new overtime regulation goes into effect," noted Paul DeCamp, an attorney with Jackson Lewis in Reston, Va. "By that time, most employers will already have implemented whatever changes they are making to their pay practices, including converting employees from exempt to nonexempt as a result of the increase in the regulatory salary threshold" from $23,660 to $47,476. "It seems unlikely that many in Congress will expend the political capital to take on this issue at that point," DeCamp said.

However, "As chair, she can keep the issue in the public domain, explain through oversight hearings the negative implications the change will have, support the lawsuit that may be filed through amicus briefs, encourage the new Secretary of Labor to revisit the issue through alternative rulemaking, and urge passage of new legislation that could reverse or modify the rule," said Michael Lotito, a lawyer with Littler and co-chair of the Workplace Policy Institute, the firm's government affairs branch. She also might seek to strike down the triennial increase of the salary threshold, he added.

Joint Employment Standard

Foxx also would support congressional efforts to overturn an August 2015 NLRB decision (Browning-Ferris Industries (BFI) of California, 362 NLRB No. 186) that the board no longer would require direct and immediate control over employment to show a joint employer relationship. Instead, a joint employer relationship could exist based on the potential to control the terms and conditions of employment, even if the control is indirect or unexercised.

The decision already has had "a profound impact on staffing solutions," said Steve Bernstein, an attorney with Fisher Phillips in Tampa, Fla. Some employers using supplier employers such as temp agencies are revisiting their service agreements. If an agreement includes a provision saying the user employer may send an employee of the supplier employer home, but the user employer hasn't exercised that contractual provision, it may have appeared previously to be "empty language." But now, that language can be "seized upon as proof of joint employment," he said.

User employers may now require supplier employers to send workers home, which might mean the supplier employer has someone onsite to direct the supplier employer's employees, he remarked.

"Joint employment has created tremendous uncertainty in the franchising context" as well, Lotito noted.

The NLRB has consolidated 61 unfair-labor-practice charges against McDonald's and 31 of its franchisees in six NLRB regions, dating to 2014. The actions allege 181 violations of the National Labor Relations Act, said Camille Olson, an attorney with Seyfarth Shaw in Chicago and Los Angeles. "The general counsel is arguing that McDonald's, as the franchisor, is liable for alleged unfair-labor-practice charges of a franchisee because it is a joint employer of the employees of the 31 franchisees.

"Some predict dire consequences if the general counsel is successful in its litigation against McDonald's," she continued. "If the board's new definition of 'joint employer status' is accepted by the courts, franchisors could face fundamental changes in their operating business model and the risk of both unionization and potential joint liability for alleged unlawful practices of other separate corporations."

"Under the joint employer standard used for the last three decades, individuals and employers have been able to work together to advance their shared interests," Foxx said. "That standard has promoted economic growth, provided countless job opportunities in new emerging fields, and enabled the entrepreneurial spirt that has long made our country thrive and its people successful."
She cautioned that "The NLRB's unprecedented actions threaten that economic progress and activity, in particular the future of the many local, family-owned businesses impacted by the decision."

Ambush Election Rule

More than 16 months of data since the ambush election rule took effect in April 2015 show that the average election period is down from 38 days to 21 to 23 days, Bernstein noted. He said he wouldn't be surprised if the average eventually dips below 20 days.

The rule speeding up elections is "an obvious effort to limit the employer's ability to effectively mount a campaign and respond to a union-organizing drive that, in most cases, has been present for months before an employer has knowledge of its existence," said David Barron, an attorney with Cozen O'Connor in Houston. The rule has "prompted many at-risk employers to become more proactive and to not wait until notice of an election to start a conversation with employees about unions."

"If elected chairman, I will employ strict oversight of the DOL and work to limit the overreach of this agency and the National Labor Relations Board," Foxx said.



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