While complying with existing wage and hour rules and laws may be challenging, it’s important to realize that the rules and laws are subject to change. Currently there are a number regulatory initiatives and bills pending in Washington which are designed to increase employee rights and tighten enforcement of the Fair Labor Standards Act. While only a few of these changes are likely to become law in the next year or so, others reflect the types of changes which may lie a bit closer to the horizon. This posting summarizes the regulatory changes and bills regarding wage and hour issues which are currently pending before the DOL and Congress.
“Plan /Prevent/Protect” Initiative to Require Comprehensive Compliance Programs
In the Spring of 2010, the DOL announced a plan to establish a comprehensive set of regulations requiring employers to establish formal compliance plans with respect to the various laws administered by the Department, to document training with respect to those plans, and to document how they are complying with their legal obligations. Failure to have such a plan and properly administering it will be deemed to be a penalty. The DOL indicated that it intends to require employers to be more proactive in their compliance, in lieu of what it perceives to be a “catch me if you can” mind-set.
Recordkeeping Rules to Limit Use of Independent Contractors
The DOL has announced its intent to greatly alter the recordkeeping required under the FLSA. This initiative was initially announced as an “FLSA Recordkeeping” proposal, but it has since been relabeled “Right to Know Under the Fair Labor Standards Act.” According the Department’s December 2010 Regulatory Agenda, this proposal was to be published in April 2011, but now it is not anticipated until sometime in June. Under the proposal, employers are expected to be required to provide greater disclosure for each pay on how each employee’s pay is computed (including deductions), and also to require that employers create, maintain and make available to the DOL a “classification analysis” for each person classified as an exempt employee under the FLSA or an independent contractor.
Break Time for Nursing Mothers
On December 21, 2010, the Wage and Hour Division of the U.S. Department of Labor published a request for information (“RFI”) from the public regarding the recent amendment to the Fair Labor Standards Act which requires employers to “provide reasonable break time and a place for nursing mothers to express breast milk for one year after their child’s birth.” The new amendment and break time requirement for nursing mothers is set forth in Section 4207 of the Patient Protection and Affordable Care Act, P.L. 111-148, and became effective on March 23, 2010. The RFI is the first step in rulemaking, and employers can expect DOL to issue new regulations perhaps as early as later this year. The key issues to be addressed by regulation include: should nursing mothers receive compensation for break time of 20 minutes or less; what is considered a “reasonable break time”; what “space provided to the nursing mother for expressing breast milk” is adequate and meets the requirements of the statute; and what would be considered “reasonable notice” to the employer of an employee’s intent to take breaks to express milk?
A Bill to Grant Veterans Veterans Day Off
On January 19, 2011, the “Veterans Day Off Act” (HR 319) was introduced to require employers of veterans who worked for the employer at least one year to take off Veterans Day. The veteran may take the day without pay, or use accrued paid time off for the absence. The employer may only deny the leave in the interest of public safety or if the leave would cause the employer significant or operational disruption.
Heightened Scrutiny of Independent Contractor Classified Workers
On April 8, 2011, the “Payroll Fraud Prevention Act” (S 770) was introduced. The Act would expand current FLSA recordkeeping requirements to all workers, including non-employees. Also, employers that misclassify employees would be subject to a civil penalty, not to exceed $1,100 per employee who was the subject of such a violation, with higher penalties for repeat violators. The bill would also require employers to give the following notice to employees and nonemployees: “Your rights to wage, hour, and other labor protections depend upon your proper classification as an employee or non-employee. If you have any questions or concerns about how you have been classified or suspect that you may have been misclassified, contact the U.S. Department of Labor.” In addition, the bill would require the Secretary of Labor to establish a single webpage on the Labor Department’s website that “summarizes in plain language the rights of employees and non-employees under the Fair Labor Standards Act.” The bill would also require states to investigate and audit employers who may be misclassifying employees, in order for those states to continue to receive federal unemployment insurance grants.
Proposed Changes to the Minimum Wage
On January 12, 2011, the “Living American Wage (LAW) Act of 2011” was re-introduced. Under this bill, the federal minimum wage would be adjusted every four years to be equal to “the minimum hourly wage sufficient for a person working for . . . 40 hours per week, 52 weeks per year, to earn an annual income in an amount that is 15 percent higher than the Federal poverty threshold for a family of 2, with one child under the age of 18, and living in the 48 contiguous States, as published for each such year by the Census Bureau.” Similar bills have been introduced since 2006.
On February 10, 2011, the “Working for Adequate Gains for Employment in Services Act,” or “WAGES Act” (HR 632), was introduced to amends the Fair Labor Standards Act to establish a base minimum wage for tipped employees of at least: (1) $3.75 an hour beginning 90 days after the Act’s enactment; (2) $5.00 an hour one year thereafter; and (3) for every year thereafter, to be the greater of 70% of the minimum wage and $5.50 an hour.
On January 5, 2011, the “Health Care Incentive Act” (HR 42) was introduced H.R. 42. The bill would require that the Secretary of Labor promulgate a rule that for any employer engaged in interstate commerce that is required by Federal of State law to pay a minimum wage at a rate set higher than the minimum ceiling as in effect on September 1, 1997, to receive a credit towards the wage for “any creditable health care benefits.”