DOL Has Been Busy During Trump Administration

 

June 18, 2018
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CHICAGO—The U.S. Department of Labor (DOL) still doesn't have a wage and hour administrator, but that hasn't stopped it from taking action during the Trump administration. It has issued a request for information about a possible new overtime rule, revoked Obama administration guidance on who is an independent contractor and who is a joint employer, revived opinion letters, and changed the definition of intern, noted Robert Boonin, an attorney with Dykema in Ann Arbor, Mich., and Detroit.

Speaking Monday at the SHRM 2018 Annual Conference & Exposition's concurrent session, "Wage and Hour Compliance: A DOL Update and Ways to Avoid Overtime Liability Landmines," Boonin provided an overview of these changes.

Request for Information

The overtime regulations of the Obama administration were blocked by a court in 2016. The Trump administration's DOL sought public input on issuing a new overtime rule in a July 2017 request for information (RFI).

Boonin said that the RFI included a number of questions that the DOL is considering, including whether there should be:

  • Any salary level.
  • Multiple salary levels, based on region, for-profit versus nonprofit, start-ups versus established businesses, or industry.
  • Annual or triennial automatic adjustments.
  • Changed duties tests. To be exempt from overtime under one of the white-collar exemptions, employees must not only be compensated on a salary basis at a rate of at least $455 per week, but also perform different exempt duties.

[SHRM members-only toolkit: Determining Overtime Eligibility in the United States]

Classifying workers as exempt correctly can be a real challenge for employers, according to Leslie Merriman, HR manager with Drake University Head Start in Des Moines, Iowa, and a session attendee.

As stated in SHRM's 2018 Guide to Public Policy Issues, SHRM supports an update of the salary level, but one that follows previous methodology to achieve a more equitable increase.

Boonin predicted that there would be a proposed overtime rule in a few months, although the DOL isn't projecting release before January 2019. He noted that developing a final rule will take a considerable amount of time. The Obama administration's proposed overtime rule received 250,000 comments. The agency must review all comments before it can issue final regulations.

Revoked Guidances

The Obama administration issued guidances that made it much more difficult to classify an individual as an independent contractor and easier for employees to claim they worked for a joint employer, Boonin said.

Under the joint-employer guidance, a business would be a joint employer if it satisfied the vague "indirect control" standard of the Browning-Ferris decision by the National Labor Relations Board. Under this standard, a business was a joint employer even if it had potential control of another entity by contract only and not in fact, for example.

Secretary of Labor Alexander Acosta revoked both guidances last year. The National Labor Relations Board, now composed of new members, is seeking to overturn Browning-Ferris through rulemaking.

Boonin cautioned employers that misclassification of employees as independent contractors remains a hotly contested issue. "A huge number of independent contractors are misclassified."

Revived Opinion Letters

In 2009, days before the inauguration, the DOL had 17 opinion letters ready to issue but they weren't released because of the imminent change of administration.

In 2010, the DOL halted the practice of issuing opinion letters, even though the Fair Labor Standards Act requires it to issue them, he observed. The Trump administration has revived the practice of issuing opinion letters, widely seen as a helpful practice for employers seeking to comply with the law, and issued completely new opinion letters in April. The DOL has a website for seeking opinion letters, but Boonin recommended that employers seek legal counsel in drafting such requests.

Changed Definition of Intern

The DOL also issued a new test this year for when interns may work unpaid.

The new test includes consideration of the extent to which:

  • Both parties understand that the intern is not entitled to compensation.
  • The internship provides training that would be given in an educational environment.
  • The intern's completion of the program entitles him or her to academic credit.
  • The internship corresponds with the academic calendar.
  • The internship's duration is limited to the period when the internship educates the intern.
  • The intern's work complements rather than displaces the work of paid employees while providing significant educational benefits.
  • The intern and the employer understand that the internship is conducted without entitlement to a paid job at the internship's end.

All the factors don't have to be met, Boonin noted, whereas under the old test all the DOL's criteria had to be satisfied.

However, he cautioned against paying interns less than minimum wage, as this can leave employers vulnerable to claims and possible liability.

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