Trump administration eyes changes to wage and hour issues | Chesapeake Virginia Dump Truck, Aggregate, Excavation Company

In several sessions at the American Bar Association’s recent Labor and Employment Law Conference, experts told attendees to expect updates in the areas of misclassification, overtime, joint employment and more. And while some of those changes will be welcomed by employers, the lack of movement so far has left them in the dark on several fronts. There is, however, a light at the end of the tunnel for at least some of these concerns.

The overtime rule

While the fate of the Obama administration’s overtime rule appears to be sealed, the timeline for a less drastic increase to the Fair Labor Standards Act’s (FLSA) salary threshold for overtime eligibility remains unclear.

As part of the ongoing litigation challenging the original rule, the U.S. Department of Labor (DOL) has asked the courts to approve the concept of a salary threshold. Jennifer Brand, associate solicitor for DOL, said during a panel discussion at the conference that the move is part of an effort to ensure the agency has the authority to address the issue.

DOL also is in the process of reading the more than 200,000 comments it received in response to a public Request for Information (RFI) on the topic, the first step in a new rulemaking process.

As for a timeline, Brand said that DOL isn’t making any information public right now but that stakeholders should watch for the agency’s fall regulatory agenda for an estimated date of when they might see draft regulations. But, she cautioned, “'fall' sometimes means other seasons when we’re talking about the regulatory agenda.”

In a separate session, M. Patricia Smith, former solicitor of labor under President Barack Obama, said stakeholders would be lucky to see a new final rule in two and a half years. The next step, a Notice of Proposed Rulemaking, will be followed by a public comment period. DOL can then put together a final rule, but that will require lots of analysis along the way, she said.

That analysis, however, is likely strategic. The more attention DOL gives the rules, the better chance it will have at surviving challenges, noted Jeremy J. Glenn of Cozen O’Connor. Secretary of Labor Alexander Acosta has talked about his dedication to following the law, which includes the steps for regulations in the Administrative Procedure Act, Glenn explained. "The more one follows those steps, the more deference a court will give [the regulation]."

What to watch: DOL’s regulatory agenda. Smith offered the same prediction as Brand, saying that employers are likely to find out DOL’s estimated date for proposing a rule when the fall agenda is released. But again, "often, the fall agenda doesn’t come out until the spring," Smith said. "We’re talking a long time."

Misclassification

Another major unresolved issue for employers is the classification of workers as independent contractors. One of Acosta’s first moves as secretary was rescinding an Obama-era Administrator’s Interpretation (AI) on classification. But DOL hasn’t issued any further clarification on its stance and federal agencies and the courts continue to enforce disparate tests for such classification.

Without additional information, employers may want to research those tests, experts said at the conference. DOL’s is an important starting point, and the National Labor Relations Board also has its own, Maureen A. Salas, a shareholder at Werman Salas P.C., noted. And finding out what test the courts have applied in your region can be important, too.

They cautioned, however, about relying too much on individual opinions. Every worker must be evaluated individually using the proper test, and even courts have noted that similar cases can have different outcomes. "This is such a difficult area," Marisa Warren Sternstein, counsel for Dentsu Aegis Network, said. So consider the economic realities, look at schedules and talk to people to find out what they’re really doing. "And remember that things change, so you have to stay on top of this," she added.

And if you’re going to recommend reclassification, be prepared to show how some increased costs now could actually result in a savings in the long run. "How much money are you really saving by classifying people this way?" she said. "Put some recent judgments up in front of finance; that’ll get their attention."

What to watch: The ongoing litigation in this area. Companies in the gig economy, like Uber and GrubHub, are on the front lines, serving as test cases. The speakers debated just how much importance to place on the outcome of these cases because, again, classification is so fact-specific. "Facts are everything," Salas said, and if GrubHub wins, "this one decision is not going to mean that in the entire industry there’s no violation." Tracey Holmes Donesky, a partner at Stinson Leonard, however, says it’s still worth watching. "I think GrubHub is certainly going to give us some guidance one way or the other," she told attendees.

Joint employment

Uncertainty about joint employment remains a thorn in employers’ sides. Acosta withdrew an Obama-era AI on this topic at the same time he rescinded the independent contractor one and again, employers haven’t heard anything since.

When it was first issued, both DOL and many management-side attorneys said that the AI didn’t represent a massive shift in the department’s position; instead, it was in line with the agency’s focus on "fissured workplaces" – those that use staffing agencies, franchises and similar arrangements. So when Acosta rescinded that document, "many in the field viewed that as a shift in enforcement priorities," Glenn said.

But employers are still juggling various joint employment tests. The D.C. Circuit Court of Appeals is expected to shed some light on what type of arrangement creates a joint employment relationship soon, but under the National Labor Relations Act.

"It’s frustrating, I know," Glenn told conference attendees. "Different laws have different standards for the same concept [and] the court decision itself will not affect joint employment’s status under any of the laws that DOL enforces."

What to watch:There are several moving parts here. First, there’s the D.C. Circuit’s Browning Ferris decision to watch for. The U.S. Supreme Court also has been asked to review an appeals court’s ruling on the issue under the FLSA, although it has not yet agreed to do so. States also are increasingly legislating their own definitions and Congress is currently considering a bill that would require that an employer have "active, direct" control over a worker's employment to be held jointly liable under either the NLRA or FLSA. That bill passed in the House but both Smith and Glenn said it will face an uphill battle in the Senate.