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Examining the Administration’s Regulatory Agenda for 2015

Examining the Administration’s Regulatory Agenda for 2015:

How Employers Should Adapt Policies and Procedures

By

William E. Grob, Esq.

Dee Anna D. Hays, Esq.

Ogletree Deakins

            If it is up to the government, 2015 is expected to be a busy year for the Department of Labor (“DOL”), Wage and Hour Division (“WHD”). 

            On March 13, 2014, President Obama signed a Memorandum for the Secretary of Labor regarding “Updating and Modernizing Overtime.”  Specifically, the Memorandum addressed “white collar exemptions,” which include the exemptions from the Fair Labor Standards Act (“FLSA”)’s overtime requirement for executive, administrative, and professional employees.  President Obama remarked that these exemptions “have not kept up with our modern economy.”  Accordingly, he directed the Secretary to propose revisions to “modernize and streamline” the existing overtime regulations.  In doing so, the President asked the Secretary to: “consider how the regulations could be revised to update existing protections consistent with the intent of the Act; address the changing nature of the workplace; and simplify the regulations to make them easier for both workers and businesses to understand and apply.”

             Currently, the minimum salary requirement for the white collar exemptions is $455 per week.  The administration indicated that approximately 3.1 million additional people would be entitled to overtime if the threshold had kept up with inflation (estimated at approximately $1,000 per week).  Accordingly, the WHD is expected to issue revisions that would increase the minimum salary for the salary basis test and make it more difficult to meet the primary duties tests to qualify for the exemptions.  The WHD was scheduled to issue a NPRM to implement these changes during February 2015.  Although the division is slightly behind the scheduled deadline, a NPRM is expected soon.  Expect a big battle as the proposals are further developed.

            In addition, on February 25, 2015, the WHD issued a final rule revising the regulatory definition of spouse under the Family and Medical Leave Act of 1993 (“FMLA”).  Specifically, the definition of spouse has changed to the law of the place in which the marriage was entered into, as opposed to the law of the state in which the employee resides. Further, the revised definition of spouse expressly includes individuals in lawfully recognized same-sex or common law marriages and marriages that were validly entered into outside of the United States if they could have been entered into in at least one state.  The rule will impact employers as it expands the definition of eligible employees entitled to FMLA leave.  It will also impact continued health coverage opportunities during FMLA leave under employer-sponsored health and welfare plans.  The effective date for the final rule is March 27, 2015.

             When it comes to litigation, wage and hour lawsuits continue to dominate the dockets and arguably pose the greatest risks for employers.  Thus, it is important for employers to communicate with their employees regarding policies and procedures for working overtime and accurately reporting the number of hours worked.  These policies and procedures should: explain the classification of exempt versus non-exempt employees; define the workweek, work schedule, and time reporting procedures; define the employer’s pay periods, paydays, and methods of payment; inform non-exempt employees that “working off the clock” is strictly prohibited; outline a clear procedure for employees to report any time keeping mistakes, improper deductions, or other pay errors;  and make employees responsible for reviewing their time records on a weekly basis and signing an attestation that the records are true and accurate.  Management training regarding these procedures is essential.  Employers should also consider conducting self-audits with the assistance of legal counsel to ensure employees are properly classified as exempt or non-exempt. 

             Dedicating the time and resources to updating policies and procedures now is well worth the investment to limit liability in the year to come. 

           

 

 

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