By: A. Scott Hecker and Noah A. Finkel
Seyfarth Synopsis: On January 4, 2023, the Biden Administration announced the release of its Fall 2022 Unified Agenda of Regulatory and Deregulatory Actions. In connection with the Administration’s new regulatory agenda, the U.S. Department of Labor’s Wage and Hour Division has a number of ambitious rulemakings on the horizon, including a target of May for a proposed revision to the standard for the FLSA’s white-collar exemptions.
With Winter 2023 upon us, the Biden Administration has issued its Fall 2022 regulatory agenda, and from the looks of it, executive agencies will be busy this year. Here, we focus on the Wage and Hour Division’s (“WHD”) rulemaking plans, which may be limited in number, but could be outsized in their impacts on employers.
When last we blogged about the Biden Administration’s efforts to increase the minimum salary that employers must pay to most of their exempt employees, DOL expected to issue a Notice of Proposed Rulemaking (“NPRM”) on “Defining and Delimiting the Exemptions for Executive, Administrative, Professional, Outside Sales and Computer Employees” in October 2022. But Halloween came and went, and the New Year brings with it a new NPRM target date of May 2023. Clearly, these deadlines are flexible, but given the resources DOL has invested in this rulemaking, we anticipate WHD will strive to timely meet its goal this time around. Accordingly, employers should monitor the kinds of changes WHD signals concerning the FLSA’s overtime requirements under the executive, administrative, professional, and computer employee exemptions. One likely and impactful change will be an increase in the minimum salary for exempt status — currently $684 per week, which annualizes to $35,568.
Once the NPRM — and its proposed minimum salary — issues, DOL will provide time for public comment. Then, WHD will need several months to review submitted comments, create a final rule, and put it into effect. We saw President Obama’s attempt to revise the FLSA exemption regulations face legal challenge, and the same could happen with this effort, depending on how high the salary threshold climbs. It remains possible that a new rule could issue in 2023 or 2024.
Another significant rule, currently in the proposed rule stage, is WHD’s “Employee or Independent Contractor Classification Under the Fair Labor Standards Act.” According to regulations.gov, DOL’s NPRM for this rulemaking received 54,000 comments, so query whether WHD will be able to review and incorporate that public input into a final rule by its suggested deadline, also May 2023. The high number of comments suggests that some stakeholders may challenge this rule in court as well; indeed, some commenters appeared to lay out their legal arguments in their submissions. For more information on what to expect when you’re independent contracting see our prior blog.
For those living in the Venn overlap between the wage-hour and government contracting worlds, WHD has a couple rules for you too:
- WHD is working on implementing regulations for Executive Order 14055, “Nondisplacement of Qualified Workers Under Service Contracts,” requiring contractors and their subcontractors awarded Federal Government service contracts “to offer qualified employees employed under the predecessor contract a right of first refusal of employment under the successor contract.” The regulatory agenda suggests WHD may still be reviewing comments on this proposal, so timing for a final rule remains unclear.
- Last, but not least, the only WHD rule listed on DOL’s regulatory agenda in the final rule stage is titled “Updating the Davis-Bacon and Related Acts Regulations.” In it, “[t]he Department proposed to update and modernize the regulations implementing the Davis-Bacon and Related Acts to provide greater clarity and enhance their usefulness in the modern economy.” We previously blogged and podcasted on the issuance and impacts of this proposed rule, so we commend you to the preceding resources for more on how the rulemaking may change DOL’s Davis-Bacon prevailing wage processes. Spoiler alert: the revised protocols are likely to increase prevailing wage rates.
For questions on these or other DOL regulatory actions, please reach out to your friendly, neighborhood Seyfarth attorney.