The United States Department of Labor (“DOL”) is becoming more active in the wake of its quiet retreat since the start of the Trump administration. Notably, and not surprisingly, the DOL’s efforts are focused on policies favorable to employers. As set out in more detail below, the DOL is (1) bringing clarity to confusion on the overtime exemptions, (2) reinstating the use of opinion letters, and (3) taking a step back from its previously expanded stance on joint employers and independent contractors.
First, the most controversial issue involves the changes to overtime exemptions. As you recall, in 2016 the DOL, under the Obama administration, the DOL modified the regulations by, among other things, substantially increasing the required minimum salary in order to claim an employee exempt from overtime under the so-called “white collar exemptions.” However, a nationwide court injunction, coupled with a transition to the more conservative Trump administration, prevented those changes from seeing the light of day. Consequently, this left a great number of businesses in a gray area on how to proceed.
On July 26th, after sitting in limbo for approximately seven months, the DOL took its first step in providing some certainty by issuing a request for information. Specifically, the DOL seeks comments from the public on the appropriate salary level for the white collar exemptions through a set of eleven (11) comprehensive questions dealing with the subject. The comment period ends September 25, 2017. Given the current administration’s stance, I suspect the prior regulations will be significantly rolled back and a more gradual process for claiming an exemption will be put in place. Those wishing to provide information to the DOL during this rule-making process can click here.
Second, in addition to moving forward on overtime regulations, the DOL reinstated the use of opinion letters. For those that may not be aware, employers often used the DOL as a sounding board by requesting its opinion of an employer’s wage and hour practices. The process allowed the employer to receive the DOL’s interpretation of the law and make a more informed decision on whether its practices were lawful. If the employer followed the DOL’s advice, it could then use the opinion letter as defense to eliminate certain damages that typically accompany federal wage and hour claims. In other words, the employer could confidently state that it relied in good faith on the DOL’s legal interpretation and as a result it was not willfully violating the law. Although this valuable tool is back in place, employers that desire to request a DOL opinion letter are advised to first discuss the matter with legal counsel. This allows the employer to determine if a request is even needed. Oftentimes advice from trusted legal counsel is all that is necessary. Also, if it turns out legal counsel and the employer agree that an opinion letter would be helpful, the request can be jointly drafted for maximum clarification on the issue to be presented.
Third, the DOL withdrew its expanded interpretation and stance on joint employer and independent contractors. The DOL’s previously expanded stance cast a wide net over employers and caused a great deal of uncertainty for businesses that traditionally work with other entities to achieve common goals. Although the DOL’s decision to relax this expanded interpretation does not, nor could not, definitively resolve all the issues surrounding this complex area of law, it does indicate a welcome step toward taking away a justification for increased litigation and expanded enforcement actions.
Do not hesitate to contact Rinke Noonan employment attorney Chad A. Staul with questions or comments about any of the above issues or any other employment law related matters.
©2017 Rinke Noonan