As the Trump administration ends its first year in office, several wage and hour laws enacted by the Obama administration have yet to be addressed. At the American Bar Association’s 11th Annual Labor and Employment Law conference last month, a panel of attorneys discussed these issues, including the definition of joint employer and the salary threshold of overtime exemption under the Fair Labor Standards Act (FLSA).
In our June blog, we reported that the U.S Department of Labor (DOL) withdrew two guidance letters calling for tighter standards for determining joint employment. By doing so, the DOL stepped back from the previous administration’s efforts to protect the rights of employees classified as independent contractors by companies that wanted to avoid liability for working conditions and wage and hour standards.
Since then, the DOL has not issued new guidance. The definition of joint employment is up to the courts rather than the DOL regardless, so the previous definition stands until a judge rules otherwise. Congress could also change the standard. In early November, the U.S. House of Representatives passed the Save Local Business Act that substantially narrowed the definition under the FLSA and National Labor Relations Act (NLRA). The bill gives businesses clear guidelines for structuring deals with contractors, and employee advocates fear that the bill would shield businesses that outsource labor from liability for workplace violations. Senate has not yet introduced a companion bill.
Meanwhile, employers must be vigilant to be compliant with the FLSA and NLRA. Review contracts with staffing agencies and contractors for red flags that cloud the employment relationship and associated rights and responsibilities. Make sure control over workers remains with the staffing agency.
The fate of new overtime rules for exempt employees also remains undetermined. The Obama administration planned to raise the salary threshold for determining eligibility for overtime pay from $23,660 to $47,476. A federal judge in Texas declared the rule invalid, so the previous threshold remains in effect. Labor Secretary Alexander Acosta agrees that the threshold should be raised, but not by as much.
Acosta intends to follow the rule of law in changing the threshold, which requires a notice and rulemaking process. Since the process involves a comment period and economic analysis, among other things, etablishing a new threshold will take a while.
Some states are moving forward with their own threshold hikes, with new levels taking effect soon. We will keep you posted on any changes at the federal level as they occur.
We wish you a happy and productive 2018, and stand ready to help you with new labor and employment challenges and opportunities!