Fall Regulatory Agenda Indicates DOL Wage and Hour Division is Working on Seven Regulatory Priorities

The U.S. Department of Labor issued its bi-annual regulatory agenda update on November 20, 2019.  Of the 63 items listed, the Wage & Hour Division (WHD) included seven regulatory priorities.  Only one of these is new: a planned Notice of Proposed Rulemaking (NPRM) on the regulations at 29 C.F.R. Part 531, which interpret section 3(m) of the Fair Labor Standards Act (FLSA), 29 U.S.C. § 203(m).  Section 3(m) allows employers to count the reasonable cost of furnishing employees with board, lodging, or other facilities towards the minimum wage obligation.  The WHD plans to issue an NPRM later this year to clarify the meaning of “other facilities” and to provide additional compliance guidance.

The other items on the WHD’s agenda would impact a range of employer obligations.  

Regular Rate 

The WHD provided updated information on the planned publication date for the final rules on the regular rate (overtime calculations) and joint employment.  The WHD published proposed revisions to the Part 778 regular rate regulations last March, and the comment period closed in June.  The proposed rules sought to provide additional guidance on whether more modern forms of compensation and benefits need to be included in the regular rate and overtime calculations, thus giving employers more flexibility to provide benefits such as employee discounts, wellness benefits, and tuition reimbursements.  The WHD submitted the draft final rules to the White House’s Office of Management & Budget (OMB) for review in September, and that review is still pending according to www.reginfo.gov.  The DOL’s agency rule list indicates that the final rule will be published this month.

Joint Employment 

The regulatory agenda indicates that the much-awaited final rule on joint employment will be published in December.  The NPRM on joint employment, published last April, proposed to adopt a four-part balancing test to determine if two or more companies are joint employers. The test originates from the 1983 Ninth Circuit decision in Bonnette v. California Health and Welfare Agency.  The comment period for the NPRM closed in June.  The WHD, however, has not yet sent the draft final rule to OMB for review, indicating that policy discussions continue at the agency.  A December publication would seem more aspirational than certain,  given OMB’s review has not yet begun.

The other four items on the WHD regulatory agenda include:

Tip Credit.  On October 8, 2019, the WHD published an NPRM on the tip credit.  The agency has proposed to revise the Part 531 regulation to include and interpret provisions of the FY 2018 Consolidated Appropriations Act that amended the FLSA to provide that “[a]n 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.”  In addition, the WHD proposes to incorporate into its regulations an opinion letter issued in November 2018, which reversed its previous sub-regulatory guidance that an employer could not take a tip credit towards workers’ wages for employees who spent 20% or more of their shift performing work that does not explicitly produce tips from the guests.  Comments on the NPRM are due on December 9, 2019.

Paying Bonuses to Salaried Non-Exempt Employees.  On November 5, 2019, the WHD published an NPRM to revise 29 C.F.R. § 778.114, which describes an alternative method for calculating overtime pay for non-exempt employees paid on a salary, known as the “fluctuating workweek.” Under this method, for employees whose hours fluctuate, an employer may reach an understanding with the employees that their salary is straight-time pay for all hours worked in a week, whether many or few.  As with exempt employees, the employer cannot reduce salary when an employee works less than 40 hours in a week, but also need only pay the employees the additional half-time overtime premium for hours worked over 40 (rather than paying overtime at 1.5 for hours over 40).  Currently, this method is not available to employers that compensate their employees with bonuses or other incentive-based pay. The WHD proposes to eliminate this restriction, thus giving employers greater flexibility to provide additional forms of compensation to salaried non-exempt employees.  Comments on this NPRM are due on December 5, 2019. 

Family and Medical Leave Act (FMLA).  The WHD plans to publish a Request for Information (RFI) on the FMLA this month.  This RFI, included in the last agenda, will solicit comments on ways to improve  regulations under the FMLA to better protect and suit the needs of workers while reducing administrative and compliance burdens on employers. The WHD transmitted the RFI to OMB in September, indicating publication is imminent.  Although the RFI eventually could lead to the WHD publishing proposed revisions to the FMLA regulations sometime next year, a final rule on the regulations is not likely to occur unless President Trump wins a second term.

Authorizing Electronic Payments of Civil Money Penalties (CMPs).  Last and least, the WHD plans to publish a direct final rule in March 2020 that will allow employers to pay CMPs assessed for willful or repeat FLSA violations through electronic payment alternatives.  Currently, the regulation requires payment by “certified check or money order.”

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.