Wage and Hour Agency’s Recordkeeping Plans Concern Employers

By Roy Maurer Jul 18, 2011

The U.S. Labor Department’s Wage and Hour Division’s (WHD) live web chat July 13, 2011, became a one-sided affair as a barrage of questioners concerned about WHD’s intentions to modify recordkeeping rules relating to workers’ employment status were rebuffed by the agency’s head, citing that the controversial regulatory proposal was still under development and not open for discussion.

WHD Deputy Administrator Nancy J. Leppink kept her responses vague and noted that the agency seeks to issue a proposed rule updating the recordkeeping regulations under the Fair Labor Standards Act (FLSA) by October 2011. Therefore, she said, any in-depth responses to commenters’ questions are premature.

Announced in its July 7, 2011, semiannual regulatory agenda, the WHD’s intent for what’s popularly known as the “right to know” rulemaking is to “foster more openness and transparency in demonstrating employers’ compliance with applicable requirements to their workers, to better ensure compliance by regulated entities, and to assist in enforcement.”

Based on a previous notice of proposed rulemaking (NPRM) the proposal likely will require employers to disclose to workers whether they are classified as an employee or an independent contractor. If they are classified as an employee, the employer would have to disclose how their pay is computed. The proposed rule likely would require employers to notify employees as to whether they are considered exempt from the minimum wage and overtime provisions of the FLSA, and if so, the basis for their exemption.

Unanswered Questions

Commenters questioned Leppink about the time, effort and expense employers would have to spend to comply with the recordkeeping proposal. Queries included:

  • “What is the level of detail that will be required in the job classification analysis?”
  • “Will the proposal include exempt/nonexempt employees or just independent contractors?”
  • “Will the ‘right to know’ recordkeeping requirements, and specifically the job classification analysis, apply retroactively to existing jobs?”

While Leppink would not discuss specifics, she noted that “not all employers provide wage statements to employees, and those that do provide varied information. As a general principle, [the Department of Labor] believes essential information about an employee’s earnings and employment status should be made available to the worker and that this greater transparency will provide employees with essential information about their earnings.”

She went on to say that greater transparency will boost employer compliance with the FLSA’s minimum wage and overtime pay requirements and will assist the Labor Department with its enforcement efforts.

In response to inquiries about the estimated cost per employee of implementing the regulations and whether WHD will institute a penalty for failing to comply with the upcoming rule, Leppink replied that the agency is considering the costs for employers and will address the economic impact under Executive Order 12866 and the Small Business Regulatory Enforcement Fairness Act.

“WHD has only the enforcement authority including civil money penalty remedies as granted by the statute. Any NPRM addressing ‘right to know’ will not adopt penalty provisions not found in the statute,” she said.

Roy Maurer is a staff writer for SHRM.


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