Archive for November, 2016

Hold it, hold it, FLSA Regulations on Hold

I’m not having a very good month.  I have been just flat out wrong twice this month.  The first time was on the 8th.  And now last night.

U.S. District Court Judge Amos Mazzant last night issued a nationwide preliminary injunction blocking the Department of Labor’s new overtime regulations from taking effect on December 1. In order to get a preliminary injunction, a plaintiff must prove certain things–including that the plaintiff has a substantial likelihood of success on the merits. Without getting into all of the legal analysis, here is what matters to most of you.

Judge Mazzant found that the language of the statute was clear and that “The plain meanings of the terms in Section 213(a)(1), as well as Supreme Court precedent, affirms the Court’s conclusion that Congress intended the EAP exemption to depend on an employee’s duties rather than an employee’s salary.” As such the judge found, “With the Final Rule, the Department exceeds its delegated authority and ignores Congress’s intent by raising the minimum salary level such that it supplants the duties test.” But the Court did not stop there. Anticipating that some could argue that the language of the statute was not clear, the Court noted: “The Department has admitted that it cannot create an evaluation “based on salary alone.” Id. at 23. But this significant increase to the salary level creates essentially a de facto salary-only test.” The Court then went on to say that because the DOL had, in the Court’s opinion, exceeded its authority, the Court would not even discuss the automatic updating mechanism contained in the Final Rules.

There are a couple of things for you to remember First, this is a preliminary injunction, so at this point it is just a delay in implementation and not a final decision regarding the legality of the Final Rule. And secondly, the DOL is not likely to let this go unchallenged. In fact they issued the following statement shortly after the judge published his order: “We strongly disagree with the decision by the court, which has the effect of delaying a fair day’s pay for a long day’s work for millions of hardworking Americans. The department’s overtime rule is the result of a comprehensive, inclusive rulemaking process, and we remain confident in the legality of all aspects of the rule. We are currently considering all of our legal options.” Also, given the procedural posture of this case, it could be argued that Judge Mazzant’s order only applies to public sector employers, but by our reading, it appears to apply to ALL employers – both public and private sector – who were going to be impacted by the new regulations.

So what should you do now? We see the following options:

If you have not done anything to prepare for these changes, it looks like your procrastination has paid off (at least for now). We would still encourage you to create an implementation plan should this injunction be overturned at some point.

If you have an implementation plan that you were preparing to roll out on December 1, you can: 1) go forward with your plan since it would keep you in compliance with both current and the potential future regulations; or 2) delay your plan pending the outcome of these lawsuits. If you choose Option 2, you should consider sending a message to any and all individuals who would have been impacted by the change. We suggest something like this:

A Federal court in Texas has issued an injunction preventing the new salary rules from going into effect. This has created uncertainty as to what changes, if any, will need to be made in the future. In order to ensure that we follow the law and avoid unnecessary disruption, we are delaying the implementation of our salary changes until we have more clarity on this issue. If you have any questions, you should contact the Human Resources Department.

Now What?

I am not a political pundit and I am certainly not going to use this blog to share my political views, but I think it is safe to say that none of us, no matter which way we voted, saw that coming. But come it did, and on January 20th we are going to have a new President and a new House and a new Senate and they are all controlled by a single party.

So now, we are all asking, what comes next? Now what?

In an effort to stay out of trouble and stick to what I know, I’m going to limit my “now what” to “now what” for those of us that work in labor and employment law and human resources. So what can we expect from Mr. Trump’s Presidency in those areas?

I have no idea. And neither does anyone else, and anyone telling you they do is kidding themselves.

So that’s it, nice talking to you, see you next time . . .

I’m kidding, because we can make some pretty good guesses, at least in some of the bigger areas.

The NLRB: Let’s start with something easy. There is nothing new here. Every time we get a change in party in the White House, we get a sea change in the composition of the Board. That is because the President gets to appoint the members of the NLRB and Republicans tend to appoint more employer-friendly Boards, Democrats tend to lean the other way and at least one member of the Board changes over every year. The NLRB has five members and currently three of those seats are filled – two by Democrats and one by a Republican. With Congress on his side, it is pretty clear President-elect Trump will fill the vacant seats with members that will tend to lean toward management. But again, nothing new there as this happens every time we get a new party in the White House. What is new is that we may, for the first time in a long time, and because we have a Congress and President of the same party, get a full Board. All five seats filled.

The DOL: We are going to have a new Secretary of Labor. What does that mean for the DOL’s pet project, the new FLSA regulations? We don’t know. But before you get all excited, don’t expect not to have to comply with these regulations. Don’t forget, they go into effect December 1, and Mr. Trump won’t be the President on December 1. There is no way Congress can act that fast, and even if they do, President Obama will veto any attempt to stop implementation. But who knows what will really happen next year. Do they get rolled back? Are they phased in or out? I don’t know and neither does anyone else, but don’t forget, every state that had a minimum wage issue on the ballot in this election voted to increase the minimum wage. So, maybe President Trump will leave it up to the states to decide. I just don’t know.

The EEOC: The current Chair of the EEOC is Jenny Yang. Chairperson Yang’s term expires in 2017. President Trump will then appoint a successor. The Chairperson of the EEOC sets the EEOC’s enforcement agenda, which in recent years has focused on pay equity, sexual orientation and transgender issues. With a new and more conservative Chair, and with the impending departure of the EEOC’s General Counsel who announced that he would be leaving the EEOC in December, it is likely that the EEOC’s enforcement focus will change dramatically. And the first place we might see that is in the EEOC’s new requirement regarding the EEO-1 form. As you know, last February the EEOC issued proposed regulations that would require employers to report certain pay data on the EEO-1 beginning in March of 2018. I would not bet on that happening now. But again, we are just going to have to wait and see. And what else might change? For example, at least for the last couple of years, the EEOC has been pretty aggressive in bringing complaints against employers for what it calls systemic violations. In short, the current EEOC likes the big splashy case. Will that trend continue, or will the EEOC be less aggressive in its enforcement and focus more on specific individual complaints?

And just to show you exactly how much we don’t really know about what President Trump will do, I’m going to leave you with this . . . what about paid leave? As you know, there has been a bunch of noise out of Congress lately about making at least some of the FMLA paid. I know what you are saying, “not anymore.” But not so fast. During his campaign Mr. Trump actually supported paid leave, at least for working mothers. Here is a quote: “We need working mothers to be fairly compensated for their work, and to have access to affordable, quality child care for their kids.” This initiative is championed by Mr. Trump’s oldest daughter, Ivanka Trump. You can read the full story in the Washington Post.

So there you go. Helpful, right? OK, not so much, but stay tuned. Time will tell.