Information contained in this publication is intended for informational purposes only and does not constitute legal advice or opinion, nor is it a substitute for the professional judgment of an attorney.
The latest Unified Agenda of Regulatory and Deregulatory Actions ("spring agenda") continues this administration's trend of adding fewer new rules and reexamining older ones. These semiannual agendas provide insight into federal agency priorities for the coming year. While the list of upcoming rules is relatively pared down compared to those issued during the prior administration, there are still a few surprises in the spring agenda. Notably, the Department of Labor (DOL) is pushing the issuance of a new proposed rule governing overtime into 2019, and the National Labor Relations Board (NLRB) is considering drafting a rule on joint employment. Some highlights of the spring agenda are discussed below.
Department of Labor
New Proposed Overtime Rule Delayed
Some surprising news from the DOL’s agenda is the delay of a revised overtime rule proposal. The DOL’s last attempt to issue a new rule on overtime for "white collar" employees was met with significant opposition. The rule, which would have increased the minimum salary level for exempt employees under the Fair Labor Standards Act (FLSA) from $455 per week ($23,660 annually) to $913 per week ($47,476 annually), was ultimately invalidated by a Texas federal court. While the DOL initially appealed the federal court's decision, it asked the Fifth Circuit to stay the litigation while it undertook new rulemaking.
To that end, the DOL's Wage and Hour Division (WHD) issued a Request for Information on July 26, 2017. The WHD sought public input regarding the minimum salary level required for exempt status so the WHD could prepare a new set of proposed overtime exemption regulations. The comment period for that Request for Information ended in September 2017. It was expected that the WHD would soon issue a new proposed rule taking this information into account, but the release of the spring agenda indicates that a notice of proposed rulemaking will not likely be issued until January of 2019.
The WHD has announced that it intends to issue a proposed rule on tip pooling by August 2018. Tip pools have been a contentious issue since the DOL issued a proposed rule in December 2017. The DOL’s previous proposal would have allowed employers to require tipped employees paid at least the full minimum wage to share their tips with employees who are not typically tipped. In response, Congress included in its omnibus budget bill a provision that rejected the proposed tip pooling rule. The relevant provision of the budget bill states:
An employer may not keep tips received by its employees for any purposes, including allowing managers or supervisors to keep any portion of employees’ tips, regardless of whether or not the employer takes a tip credit.
The DOL intends to use this new proposed rule to withdraw its December 2017 rule, and to align its regulations with the provision in Congress’s budget bill.
Clarifications of “Regular Rate” under the Fair Labor Standards Act
The WHD also intends to issue a rule proposal around September 2018 updating the regular rate requirements under the FLSA. The regular rate under the FLSA is used to identify what payments qualify as the compensation to the employee for purposes of determining overtime pay. Specifically, the WHD is seeking to clarify section 207(e)(2) of the FLSA, which excludes payments made for periods where no work is performed, such as vacation or holiday pay, reimbursements to employees for travel expenses, and any similar payments made to an employee that are not made as compensation for the employee’s work. It is unclear at this time what specifically the WHD will clarify about section 207(e)(2).
Apprenticeship Program Certification Guidelines
In keeping with the President Trump’s Executive Order 13801: Expanding Apprentices in America, the Employment and Training Administration (ETA) has stated its intent to revise the Code of Federal Regulations as it pertains to the registration of apprenticeship programs. The proposed rule will establish guidelines on how to certify high-quality, industry recognized apprenticeship programs, among other updates and modifications. The Trump administration’s June 15 executive order was focused on promoting apprenticeships and workforce development programs by reducing the regulatory burden on those programs. This upcoming rule is another step in promoting the administration’s agenda on apprenticeship programs.
Simplifying the Tracking of Workplace Injuries and Illnesses
The Occupational Safety and Health Administration (OSHA) plans to reexamine the Improve Tracking of Workplace Injuries and Illness final rule issued in May of 2016. Under the final rule, employers with 250 or more employees were required to electronically submit to OSHA information from the Log of Work-Related Injuries and Illness form, and the Injury and Illness Incident Report form. The proposed rule would lower the burden on employers by only requiring the submission of the Summary of Work-Related Injuries and Illnesses form. OSHA is also seeking comment on adding the Employer Identification Number, so that OSHA and the Bureau of Labor Statistics can cross reference their reports, potentially reducing the burden on employers to report injuries and illnesses to both agencies.
The contentious "persuader" rule that would have expanded reporting requirements for employers that use labor-management consultants for certain purposes is close to being formally rescinded. The final rule that would achieve this end has been submitted to the Office of Management and Budget (OMB) for review, and is expected to be issued this month.
Association Health Plans
A final rule governing the formation of Association Health Plans (AHPs), which would allow small businesses with a commonality of interest to join together in an association to sponsor large group health plans, is expected to be issued this summer. The DOL had asked for input on its proposed rule with respect to how broadly it should define commonality of interest for purposes of an AHP and the authority of the DOL to preempt state multi-employer welfare arrangement regulations for AHPs, among other issues. The rule is currently at OMB, the last step before publication in the Federal Register.
National Labor Relations Board
With the release of the spring agenda, it appears the NLRB intends to clarify its position on joint employment. For three decades prior to 2015, the NLRB interpreted joint employment under the National Labor Relations Act (NLRA) as requiring that the alleged joint employers “shared or codetermined” the terms and conditions of employment, and argued that the “essential element in [the joint employment] analysis is whether a putative joint employer’s control over employment matters is direct and immediate.” TLI, Inc. 271 NLRB 798, 799 (1984): In Re Airborne Freight Co. 338 NLRB 597 (2002). Over just the last three years, the NLRB has changed its official position on the standard for joint employment under the NLRA three times.
In August of 2015, the NLRB determined that “control exercised indirectly—such as through an intermediary—may establish joint-employer status.” Browning-Ferris Industries of California, 362 NLRB No. 186 (Aug. 27, 2015). This greatly expanded the category of joint employers to include employers that had no direct control over the employee. Then, on December 14, 2017, the NLRB revised its decision in Hy-Brand Indus. Contractors, Ltd, 365 NLRB No. 156 (Dec. 14, 2017), returning to the more restrictive standard of joint employment that the board had operated under prior to 2015. Three months later, on February 26, 2018, the NLRB vacated its 2017 decision, reaffirming the broad definition of joint employer established in 2015. On April 6, 2018, the D.C. Circuit agreed to review the decision in Browning-Ferris.
Meanwhile, the NLRB indicates in the spring agenda that it is “considering engaging in rulemaking to establish the standard for determining joint-employer status.” The NLRB has not set any date to expect its notice of proposed rulemaking on the joint-employer issue, instead placing the proposed rule on the “Long-Term Actions” agenda. However, in a press release, NLRB Chairman John Ring said he was "committed to working with my colleagues to issue a proposed rule as soon as possible," intimating the proposal would be moving forward in the coming months.
Request for Information on the Representation Election Rule
In the short term, the NLRB intends to issue a Request for Information (RFI) regarding its representation election regulations in June 2018. On December 15, 2014, the NLRB issued a final rule that accelerated the election process for labor unions, potentially allowing an election to be held in as few as 13 days from the filing of the representation petition. The NLRB’s new RFI has a specific focus on the December 15, 2014 final rule, and is considering revising the representation election regulations.
The same day the regulatory agenda was released, Sen. Bernie Sanders (I-VT) and Rep. Mark Pocan (D-WI) introduce companion legislation in the House and Senate that would make it easier for employees to form unions. The Workplace Democracy Act, an updated version of the Employee Free Choice Act or "card check" bill introduced during the Obama administration, would allow the NLRB to certify a union as the exclusive bargaining representative if a majority of eligible workers provide consent through a signup process. The bill would also, among other provisions, allow for secondary boycotts and picketing, expand and update the persuader rule, apply the "direct or indirect control" standard to joint employment, enact "first contract" provisions whereby employers would be required to negotiate a first contract within 10 days of receiving a union request, and apply an "ABC" test under the NLRA to determine whether a worker is an independent contractor. Specifically, under this test, an individual would be presumed an employee unless: "(A) the individual is free from control and direction in connection with the performance of the service, both under the contract for the performance of service and in fact; (B) the service is performed outside the usual course of the business of the employer; and (C) the individual is customarily engaged in an independently established trade, occupation, profession, or business of the same nature as that involved in the service performed."
This bill is not expected to advance, although its provisions could be used as talking points in the mid-term elections.
The Department of Homeland Security
Additional Requirements on H-1B Nonimmigrant Visas
The Department of Homeland Security (DHS) intends to issue a set of proposed rules to revise the H-1B visa program. The first of DHS’s proposed rules is projected to be issued around July 2018. This first proposed rule would establish an electronic registration program for petitions subject to numerical limitations for the H-1B nonimmigrant classification. This rule would allow the U.S. Citizenship and Immigration Services (USCIS) to more efficiently manage the intake of applicants and the lottery process for H-1B petitions. The second proposed rule, slated for a January 2019 publication date, would revise the H-1B visa program. The proposed rule will reexamine the definition of specialty occupation, employment, and the employer-employee relationship under the program. DHS will also propose other requirements to ensure H-1B visa holders are paid an appropriate wage.
For other immigration-related rulemaking, see DHS’s agenda for 2018.
Equal Employment Opportunity Commission
Revising Wellness Program Regulations
The Equal Employment Opportunity Commission intends to issue a set of proposed rules around January 2019 to address the EEOC’s regulation of wellness programs. This set of rules comes as no surprise, as the EEOC was ordered by the U.S. District Court for the District of Columbia to reconsider its rules governing incentives for employer-sponsored wellness programs. The court found the EEOC did not properly explain, as it is required to do under the Administrative Procedures Act, why it set the maximum incentive or penalty under wellness programs at 30% of the cost of self-only coverage.
Many items on the spring regulatory agenda deal with rescissions of existing rules, which is consistent with the president's directive. But in the area of labor and employment law, while some matters are, in fact, being rescinded, there remains a robust agenda of changes ahead. We will continue to keep you informed of these developments.