Wage & Hour Litigation Blog

Something Old, Something New: Term Two, Month Two of the Obama WHD

Posted in Misclassification/Exemptions

Wage Hour Division.gifAuthored by Alex Passantino

Two months into the second term of the Obama Administration, we’re beginning to get a sense of the policy priorities for the Wage and Hour Division’s next four years.  With a flurry of activity in early 2013, WHD has all but completed the first term’s regulatory agenda.  And, although we have yet to see a comprehensive regulatory agenda, WHD’s recent activities provide us with some indication of where it plans to head.  Of course, without a confirmed Secretary of Labor or WHD Administrator, it is difficult to know the precise direction, but the President’s nomination of Thomas Perez is a clear signal that the course will not be changing all that much.

First, we take a look at where WHD — or, perhaps more precisely, the Administration on WHD issues — is going:

Proposal to Increase the Minimum Wage

During his State of the Union address on February 13, 2013, President Obama proposed increasing the minimum wage from $7.25 to $9.00, then indexing the minimum wage to inflation.  In the days that followed, policy-makers, economists, workers, small business owners, and countless others offered their opinions on the impact of such an increase. 

The President’s address once again brought the issue to the forefront, and legislation has been proposed to raise the minimum wage to $10.10 over three years, with subsequent indexing to the consumer price index.  For tipped employees, the proposed legislation would raise the cash payment from $2.13 per hour to 70% of the minimum wage.  The Senate held a hearing on increasing and indexing the minimum wage on March 14, 2013. 

Despite the renewed attention on the minimum wage, the political climate in Washington is such that an increase is not likely in the short term.  Nevertheless, the Administration has demonstrated that this is a second term priority, so we will continue to monitor closely.

Survey to Collect Information About Employees’ Experience with Worker Misclassification

Perhaps the most controversial regulatory initiative proposed by WHD in the first term was what has been called the “Right-to-Know” rule.  Last year, WHD placed the rulemaking on its long-term action agenda.  The long term agenda was described as “items under development but for which the agency does not expect to have a regulatory action within the 12 months after publication of this edition of the Unified Agenda.”  In the most recent Regulatory Agenda (December 2012), the Right-to-Know rulemaking remained a long-term action. 

Foreshadowing that future action, on January 11, 2013, WHD submitted for comment a proposal to collect information about employment experiences and workers’ knowledge of basic employment laws and rules so as to “better understand” employees’ experience with worker misclassification.  There is little doubt that WHD intends to use the survey results to support a regulatory proposal in the same vein as the Right-to-Know proposal.  As a result, if and when the survey process begins — at present, it is expected in late summer, early fall — employers should be prepared to respond.  We will continue to keep you apprised as this situation develops.

In addition to these new proposals, WHD has nearly completed its first term agenda:    

Final Rule Regarding Nondisplacement of Qualified Workers Under Service Contracts

On January 18, 2013, nearly four years after the Executive Order establishing the requirement, the FAR Council and WHD rules requiring contractors and subcontractors who are awarded a federal service contract to provide the same or similar services at the same location to, in most circumstances, offer employment to the predecessor contractor’s employees in positions for which they are qualified, went into effect.  For a detailed discussion of the requirements, see Final Rules Regarding the Nondisplacement of Qualified Workers Under Service Contracts Go Into Effect on January 18, 2013.

Amendments to the Family and Medical Leave Act Regulations

On February 6, 2013, WHD issued a long-awaited final rule and regulations (effective March 8, 2013) implementing statutory changes in legislation passed in 2009 and 2010.  The new regulations:

•Increase and clarify scope of military exigency leave;

•Extend military caregiver leave;

•Clarify calculation of increments of intermittent FMLA leave; and

•Clarify airline flight crew employees FMLA eligibility requirements.

WHD made minor modifications to its forms and issued a new form for military caregiver leave for veterans. WHD also issued an Administrator’s Interpretation regarding the definition of a “son or daughter” with respect the age of a son or daughter at the onset of a disability.

For additional information, take a look at Seyfarth’s Department of Labor Issues New FMLA Regulations newsletter.  

Amendments to Companionship and Live-In Worker Regulations

The final outstanding (non-long-term) item on the first term agenda relates to companionship services and live-in workers.  Back in December 2011, WHD published a notice of proposed rulemaking that would significantly limit the application of the FLSA’s companionship services exemption.  On March 21, 2012, the period for public comment ended.  Since that time, WHD has been reviewing the comments and developing the final rule.  On January 15, 2013, the final rule was sent to the White House’s Office of Information and Regulatory Affairs for review, which is one of the final steps before a rule is published.  It appears that a final rule on this issue can be expected this Spring.

Conclusion

It’s been a busy first two months, which should give an indication of things to come.  Over the coming weeks, we will continue to keep you updated on the regulatory developments at WHD, as well as provide some insight into the agency’s enforcement efforts.