By Jennifer Hagerman
Less than six months into the Trump Administration, the Department of Labor (“DOL”) has taken several actions that are widely viewed as favorable to employers. Most significant is the DOL’s withdrawal of two Wage & Hour Administrator Interpretations on joint employment and independent contractors. Also of note are the DOL’s decisions to reinstate the practice of issuing opinion letters, revise the “Persuader Rule,” and delay the compliance date for electronically submitting injury and illness reports to the Occupational Safety and Health Commission (“OSHA”). Finally, in a recently filed brief in the Fifth Circuit Court of Appeals, the DOL stated that it intends to revise the salary level for the Fair Labor Standards Act (“FLSA”) white-collar exemptions via new regulations. These changes indicate that the Trump Administration is now focused on what it considers to be its “pro-business” agenda.
DOL Withdraws Guidance on Joint Employers and Independent Contractors
Two Administrator Interpretations that many viewed as expanding the definition of “employer” were withdrawn by the DOL on June 7, 2017. Administrator Interpretation No. 2015-1 set forth guidance on the Wage & Hour Division’s definition of “independent contractor.” Specifically, the guidance stated that, when determining whether an individual is an independent contractor or an employee, the DOL would focus on the “economic realities” of the individual’s work, as opposed to whether the putative employer controls the individual’s work. This was contrary to the DOL’s prior focus on the “controls test” and was viewed as an attempt by the DOL to reclassify many workers as employees rather than independent contractors.
Similarly, Administrative Interpretation No. 2016-1 addressed the standards for determining joint employer coverage under the FLSA and took the position that joint employment should be “defined expansively.” Under the now-withdrawn guidance, the Wage & Hour Division differentiated between “horizontal” joint employment and “vertical” joint employment and provided guidance on assessing those relationships separately. In assessing “vertical” joint employment, the DOL stated that it would apply the “economic realities” test, which ultimately meant that more companies would be considered joint employers. While the DOL noted that the withdrawal of these two Administrator Interpretations “does not change the legal responsibilities of employers” under the FLSA, it is a strong indication that the DOL intends to return to the more “traditional” view of employment relationships.
DOL Opinion Letters Return
On June 27, 2017, the DOL announced that it will reinstate the practice of issuing Opinion Letters by the Wage & Hour Division regarding the application of the FLSA to various factual circumstances. The DOL also introduced a new website to assist with requesting an Opinion Letter. In 2010, the Obama Administration ceased issuing Opinion Letters and began releasing more general guidance through “Administrator Interpretations.” Opinion Letters are commonly considered a useful resource, and offer employers an opportunity to establish a “good faith” defense against liability under the FLSA.
DOL Issues Notice of Proposed Rulemaking to Revise the “Persuader Rule”
In a Notice of Proposed Rulemaking published on June 12, 2017, the DOL set forth its intention to rescind and revise the “Persuader rule,” which is currently subject to a permanent injunction preventing it from taking effect. Under the “Persuader rule,” which was initially promulgated in March 2016, employer and their labor relations consultants (including attorneys) would have been required to make public disclosures of relationships that were previously confidential.
Some of the disclosures included the identity of the consultant (or attorney) seeking to influence employee unionization decisions and the activities of that consultant. According to the DOL’s notice, the DOL’s decision to rescind and revise the “Persuader rule” is based on a perceived need “to give more consideration to several important effects of the Rule on the regulated parties” and to “address the concerns that have been raised by the reviewing courts” as well as considering “the potential effects . . . on attorneys and employers seeking legal assistance.”
OSHA Delays Date for Compliance with Electronic Reporting of Injury and Illness
OSHA had previously set a deadline of July 1, 2017 for employers to begin complying with electronic reporting obligations under the rule “Improve Tracking of Workplace Injuries and Illnesses.” On June 27, 2017, OSHA proposed a delay of the compliance date until December 1, 2017. According to OSHA’s press release, the “proposed delay will allow OSHA an opportunity to further review and consider the rule” to address questions of “law and policy.”
DOL Effectively Abandons 2016 Overtime Rule
In a decision that received widespread media coverage, a Texas federal district judge in late 2016 blocked the Obama administration’s new overtime rule shortly before it was set to go into effect. Under that final rule, among other changes, the minimum weekly salary threshold to qualify for most of the white-collar overtime exemptions would have increased from $455 to $913. Since the injunction was issued, the final rule has been caught in a sort of legal limbo. The DOL brought some clarity to the status of the rule on June 30, 2017, in a brief filed with the Fifth Circuit Court of Appeals.
While the DOL argued that the injunction should be reversed, it did so on the grounds that the DOL should have the authority to set a salary level (the district court held, in a somewhat bizarre decision, that the DOL does not possess the authority to set a minimum salary level, a holding that the DOL continues to oppose). The DOL requested that the court not address the specific minimum weekly salary set by the 2016 final rule because the DOL intends to issue new regulations setting forth a revised salary level. In previous statements, DOL Secretary Alex Acosta has suggested that an increase in the salary level to approximately $30,000 per year would be more appropriate.