U.S. Department of Labor (DOL)

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As we previously reported here and here, in January 2021 the U.S. Department of Labor (DOL) proposed a business-friendly final rule concerning the classification of workers as independent contractors under the Fair Labor Standards Act (FLSA).  The final rule, which was scheduled to take effect in March 2021 (but never did), reaffirmed the use of the so-called “economic reality test” to distinguish between independent contractors and employees under the federal wage/hour law.  In essence, the rule was intended to provide a more uniform approach to worker classification.

Shortly after taking office, however, President Biden postponed the effective date of the final rule and suggested it should be repealed.  The Biden administration has now followed through on that plan, with the DOL blocking the rule entirely earlier today.  In a press release announcing the rule’s withdrawal, the DOL stated: “Upon further review and consideration of the rule and having considered the public comments, the [DOL] does not believe that the Independent Contractor Rule is fully aligned with the FLSA’s text or purpose, or with decades of case law describing and applying the multifactor economic realities test.”Continue Reading Department of Labor withdraws pro-business independent contractor final rule

This week, the U.S. Department of Labor (DOL) proposed a new rule that would create a uniform approach to the way companies classify workers as independent contractors or employees under the Fair Labor Standards Act (FLSA). The notion of classifying workers as independent contractors versus employees has continued to gain importance in recent years, given the growing gig economy, which makes independent contractors central to the business models of many major companies.

The DOL’s newly proposed rule would greatly benefit companies, by making it easier to classify workers as independent contractors and thereby remove a company’s obligation to provide typical employee benefits and workplace protections, such as paid leave, overtime pay and other fringe benefits. This marks a large shift from the standard proposed under the Obama administration, which would have broadened the scope of employee status, but was ultimately nixed by the Trump administration in 2017.
Continue Reading U.S. Department of Labor proposes new “reality” for classifying independent contractors

On May 20, 2020, the U.S. Department of Labor (DOL) published a final rule explaining that bonuses and other incentive payments—paid in addition to an employee’s weekly salary—are compatible with the fluctuating workweek (FWW) method of calculating overtime under the Fair Labor Standards Act (FLSA). The final rule went into effect on August 7, 2020.

On August 31, 2020, the DOL issued an opinion letter confirming that an employee’s work hours do not have to fluctuate above and below 40 hours per workweek for an employer to use the FWW method of calculating overtime pay. The opinion letter also cautioned that employers who use the FWW method generally may not “deduct from an employee’s salary for absences occasioned by the employee.” Both developments are discussed below, following the FWW refresher.
Continue Reading DOL issues new final rule and updated guidance for employers who use the fluctuating workweek method to calculate overtime

Earlier this year, the U.S. Department of Labor (DOL) issued a rule updating its interpretation of the “joint employer” doctrine under federal wage and hour law.  Yesterday, however, a New York federal judge struck down a significant portion of the rule.  Judge Gregory H. Woods’ 62-page decision delivers a significant blow to businesses that had relied on the business-friendly nature of the DOL’s new rule.

By way of background, the joint employment doctrine refers to a situation where a worker is deemed employed by more than one entity at the same time.  If multiple entities are considered joint employers, they can then generally each be held jointly and severally liable for workplace violations (e.g., discrimination, harassment, retaliation, unpaid wages).
Continue Reading New York federal judge nixes U.S. Department of Labor’s new “joint employer” rule

The U.S. Department of Labor, Wage and Hour Division (WHD) recently announced it will no longer automatically pursue pre-litigation liquidated damages from employers.  WHD now takes the position that recovering pre-litigation liquidated damages should only occur in a limited number of cases and it will more selectively pursue such additional recoveries.

WHD issued this new guidance in response to Executive Order 13294.  Per WHD’s announcement, the policy shift represents an effort to help spur economic recovery.  The change also is intended to reduce the time needed to conclude Fair Labor Standards Act (FLSA) administrative cases to facilitate faster payment of back-wages to aggrieved employees.
Continue Reading Pursuit of pre-litigation liquidated damages no longer the DOL’s default policy

On January 12, 2020, the U.S. Department of Labor (DOL) issued its final rule updating and revising its interpretation of joint employer status under the Fair Labor Standards Act (FLSA). The new rule simplifies the FLSA joint employer analysis with a four-factor test for determining whether workers are jointly employed by associated businesses or persons. The DOL’s changes are the first meaningful revisions since the department’s interpretive regulation was issued 60 years ago. According to the department, the purpose of the rule is “to promote certainty for employer and employees, reduce litigation, promote greater uniformity among court decisions and encourage innovation in the economy.” Although application of this final rule is limited to FLSA wage and hour issues, the National Labor Relations Board and the Equal Employment Opportunity Commission are expected to similarly revisit the joint employer analysis in their respective contexts.

History

The new DOL rule replaces an interpretation that had broadened liability for joint employment under the FLSA. In 2016, former head of the Wage and Hour Division David Weil issued guidance that increased scrutiny of situations in which multiple companies might employ workers jointly. In 2017, the DOL rescinded Weil’s interpretation and in April 2019, provided a “Notice of Proposed Rule Making” relating to the joint employer test.   The final rule adopted on January 12, 2020, makes certain changes to and clarifications of the April 2019 proposed version. The rule takes effect on March 16, 2020.Continue Reading DOL makes historic, pro-business changes to FLSA joint employer test

On December 16, 2019, the U.S. Department of Labor (DOL) published its first significant revision since 1968 to its interpretation of the calculation of the “regular rate” under the Fair Labor Standards Act (FLSA).[1] The regulations address whether certain fringe benefits must be included in calculating an employee’s regular rate for overtime purposes. With the publication of this final rule, the DOL seeks to not only provide clarity as to what is excluded from the regular rate, but also update regulations to better reflect the 21st-century workplace.

The DOL published a Notice of Proposed Rulemaking (NPRM) underlying the new regular rate rule on March 29, 2019. Comments to the proposed rule were submitted by small business owners, individual workers, unions, and professional associations. In response to those comments, the DOL made some modifications to the proposed rule before adopting it.Continue Reading DOL final rule updates exclusions from employees’ regular rate

On September 24, 2019, the U.S. Department of Labor (DOL) published a highly anticipated final rule that updates the salary thresholds necessary to qualify for overtime exemptions – often referred to as the “salary level test” – under the Fair Labor Standards Act (the 2019 Final Rule).[1] This rule will replace the prior final rule published on May 23, 2016 (the 2016 Final Rule) under the Obama administration, which was enjoined in 2016 and remains the subject of an abated appeal pending before the Fifth Circuit Court of Appeals.

The DOL published the Notice of Proposed Rulemaking (NPRM) underlying the new rule on March 22, 2019. In response, the DOL received more than 116,000 comments. Based on those comments, the DOL made several changes that are reflected in the 2019 Final Rule.Continue Reading DOL final overtime rule issued with few significant changes from 2019 proposed rule

The U.S. Department of Labor (“DOL”) recently released its 2010 regulatory plan, which envisions a major change in how DOL interprets the Labor-Management Reporting and Disclosure Act of 1959 (“LMRDA”) as to when an employer must disclose its use of attorneys or consultants to help persuade employees not to unionize. In particular, DOL will be seeking…