Federal regulations for employers rapidly changing

Anthony Kuchulis, BridgeTower Media Newswires

Prior to taking office, President Trump vowed to “formulate a rule which says that for every one new regulation, two old regulations must be eliminated.” Politics aside, some observers saw irony in a regulation intended to reduce regulation. In any event, the pace and scope of regulatory change this year has been significant, and many of those changes have a direct impact on employers and employment practices. Here is a summary of key changes within the last few months and what they mean for businesses.

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Salary floor increase – abandoned

The Department of Labor (DOL) will not defend the previous administration’s salary level increase for employees exempt from portions of the Fair Labor Standards Act, including overtime rules. In November 2016, a federal judge blocked implementation of the rule, which would have doubled the minimum salary level for exempt executive, administrative and professional employees. On June 30, the DOL filed a brief asking the Fifth Circuit Court of Appeals to uphold the agency’s legal authority to set a salary threshold, but it would not defend the validity of the increased salary threshold. Rather, the DOL indicated it would review the salary threshold and solicit further comment. Employers can reasonably expect that the minimum salary requirement for otherwise exempt employees will remain at its current level of $23,660 per year, or $455 a week for the foreseeable future.

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Misclassification and joint employer guidance – withdrawn

On June 7, the DOL withdrew guidance on two matters relating to classification of employees as independent contractors and joint employer liability. In 2015, the DOL indicated it would use an “economic realities test” to crack down on employers that avoided employment laws by misclassifying employees as independent contractors. The withdrawal of the guidance signals that cracking down is no longer an administrative priority. Employers should tread cautiously, however, because many state laws relating to employee classification are more stringent than federal regulations and vigorously enforced.

With respect to joint employer liability, in 2016, the DOL appeared to broaden the circumstances under which two or more businesses could be considered joint employers of the same employee and therefore jointly liable for alleged labor violations committed by the other. For some employers, this guidance caused confusion as to when liability may attach in situations such as temporary employees or subcontractor labor violations. Employers can likely expect to see these laws applied consistently with pre-guidance interpretations as determined by courts in each jurisdiction.

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Blacklisting rule – blocked

On March 27, President Trump signed a measure blocking a requirement that federal contractors must report labor violations when bidding on large projects. Under the rule, the disclosure of non-final and non-adjudicated violations were used as a basis to bar contractors from federal projects. The resolution signed by Trump went a step further and prevented the DOL from issuing a substantially similar rule in the future. This move will offer relief to contractors concerned about the prospect of losing potentially valuable contracts for disclosing or failing to disclose alleged labor violations.

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OSHA electronic reporting – postponed

On June 28, the Occupational Safety and Health Administration (OSHA) published a proposed rule to delay compliance with a requirement for certain industries to report injuries electronically. The rule had originally been set to take effect on July 1; however, the government website for reporting injuries indicated that electronic forms were not available. OSHA now suggests that electronic forms will be available Aug. 1, but it seeks to delay any compliance requirements until Dec. 2, 2017, “to provide the new administration an opportunity to review the new electronic reporting requirements prior to their implementation and allow affected entities sufficient time to familiarize themselves with the electronic reporting system.” The delay would not impact other parts of the rule, such as a prohibition on retaliation against employees who report a work-related injury or illness.
Employers who are subject to electronic reporting requirements should check for the electronic reporting portal after Aug. 1.

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Transgender guidance – withdrawn

On Feb. 22, the U.S. Department of Education and U.S. Department of Justice formally withdrew previously issued guidance on transgender students’ rights. Many observers thought the previously issued guidance could have a downstream impact on employers as it potentially expanded how courts evaluated discrimination claims “on the basis of sex” to include gender identity discrimination claims. The withdrawal announcement asserted that previous guidance was issued without sufficient review. This will not impact state law, which can contain employment and education protections for individuals based on gender identity and sexual orientation.

Employers should closely monitor changes at the federal level, and recognize that state laws can have a significant impact on whether and how existing practices or procedures should be updated. Best practices are to carefully consider the full legal landscape before making significant compliance changes and to consult with an employment attorney about unclear policy change or potential conflicting laws.

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Anthony Kuchulis is an attorney with Barran Liebman LLP. He advises and represents employers in regard to a wide range of employment and labor law issues. Contact him at 503-276-2199 or akuchulis@barran.com.

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