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Washington Labor & Employment Wire » Department of Labor

DOL Announces Semiannual Regulatory Agenda, Including Review of FLSA Exemption for Companionship Services and Revised Rules for Administrative Proceedings

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On July 7, the DOL published its spring 2011 semiannual regulatory agenda. The agenda compiles all regulations expected to be under review or development during the coming year. Notably, the agenda states that, “in light of significant changes in the home care industry” the DOL intends to review the rule exempting “companionship services” from the FLSA.” Currently, the FLSA provides an exemption from minimum wage and overtime compensation for domestic employees engaged in providing companionship services. However, in October the DOL intends to issue a Notice of Proposed Rule-making “examining the definition of companionship services,” the criteria used to judge whether employees qualify as trained personnel rather than exempt companions, and the applicability of the exemption to third party employers.

The DOL also plans to change the rules of practice and procedure for its administrative proceedings. While the original procedural rules were modeled on the Federal Rules of Civil Procedure, these rules have not been amended to account for the multiple amendments to the Federal Rules. In explaining the need to address the procedural rules, the DOL further noted that “the nature of litigation has also changed [since the current rules’ implementation], particularly in the areas of discovery and electronic records.” Further, while the subject of administrative proceedings used to be primarily workplace injury and disease, now claims are more often “whistleblower and workplace retaliation claims” that “require more structured management and sophisticated motions and discovery procedures than our current regulations provide.”

The regulatory agenda also includes several significant proposed rules whose development has been underway for some time. The agenda notes the DOL’s intention to move forward with narrowing the “advice exemption” to the Labor Management Reporting and Disclosure Act ( “LMRDA” ) and expanding the definition of “persuader activities” under the Act. The DOL’s proposed changes to the LMRDA will increase these reporting requirements. Currently, the LMRDA requires the disclosure of agreements with persons who work on behalf of employers to persuade employees to exercise or not exercise their rights to organize or collectively bargain, or to persuade employees of how they should exercise such rights. See Washington Labor & Employment Wire » DOL to Publish Proposed Rule Expanding Reporting Requirements for Labor Consultants and Persuaders. The agenda also includes moving forward with a proposed rule published on June 22 that revises the list of industries required to record workplace industries and illnesses and makes reportable all amputations and in-patient hospitalizations resulting from work-related incidents. See Washington Labor & Employment Wire » OSHA Proposal Would Revise List of Industries Required to Record and Report Worker Injuries and Illnesses

Similarly, the agenda indicates that the DOL is moving forward with multiple other OSHA initiatives already underway, including the development of a rule requiring employers to implement an Injury and Illness Prevention Program. OSHA is also in the early stages of formulating rules to regulate workplace exposure to beryllium and food flavorings containing diacetyl and also plans on holding hearings on occupational exposure to crystalline silica. 

Finally, this fall OSHA plans to issue two final rules of note. First, in September OSHA will issue a final rule updating the construction industry standard for the construction of electric power transmission and distribution lines. This rule is intended to “prevent fatalities, add flexibility to the standard, and update and streamline” the existing rule. In conjunction with this rule, OSHA will also revise general industry requirements to ensure that the requirements for work performed in the maintenance of electric power and transmission and distribution installations are consistent with construction requirements. Second, OSHA is scheduled to promulgate a rule protecting construction workers in confined spaces in November. The current rule governing work in confined spaces applies only to “general industry” workers, but not to construction workers.

DOL to Publish Proposed Rule Expanding Reporting Requirements for Labor Consultants and Persuaders

Section 203 of the Labor-Management Reporting and Disclosure Act requires the disclosure of agreements with persons who work on behalf of employers to persuade employees to exercise or not exercise their rights to organize or collectively bargain, or to persuade employees as to how they should exercise such rights. See 29 U.S.C. § 433(b). However, the Act provides an exemption to this so-called “persuader” reporting requirement where the would-be persuader is merely “giving or agreeing to give advice” to an employer. See id. at § 433(c).

On June 21, 2011, the U.S. Department of Labor’s Office of Labor-Management Standards (”OLMS”) will publish a proposed rule in the Federal Register narrowing this  ”advice exemption” and thus expanding the Act’s reporting requirements. Historically, the advice exemption has been broadly interpreted, exempting persuader reporting when consultants or attorneys advising employers have no direct contact with employees. This includes situations where consultants or attorneys have prepared materials for use by the employer.

The OLMS’s proposed rule will reject the current interpretation of “advice” and expand the definition of reportable “persuader activities” to include “all actions, conduct, or communications, on behalf of an employer that . . . have a direct or indirect object to persuade employees concerning their rights to organize or bargain collectively.” The proposed rule will seek to limit the advice exemption to the “plain meaning” of “advice,” defined as “an oral or written recommendation regarding a decision or course of conduct.” Reporting will thus be required “in any case in which the agreement or arrangement, in whole or in part, calls for the consultant to engage in persuader activities, regardless of whether or not advice is given.”

The proposed regulation will also provide examples of reportable agreements or arrangements, including a labor consultant:

  • Agreeing to plan or orchestrate an anti-union campaign through specific persuader activities;
  • Engaging on behalf of the employer in any other actions, conduct, or communications designed to persuade employees;
  • Engaging in any conduct, actions, or communications that utilize employer representatives to persuade employees, such as directing or coordinating the activities of employer representatives, or providing persuader material to them for dissemination; and
  • Drafting or implementing policies for the employer that aim to directly or indirectly persuade employees.

Under the proposed rule, reporting would still not be required where a consultant or attorney enters into an arrangement exclusively to provide advice to an employer - as that term is narrowly construed by the proposed rule - such as counseling employer representatives on what they may lawfully say to employees, ensuring a client’s compliance with the law, or providing guidance on NLRB practice or precedent.

Free DOL “I-Phone App” To Allow Employees to Track Time and Calculate Wages Owed

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On May 9th, the DOL announced the launch of its first application for smartphones, a timesheet to help employees independently track the hours they work and determine the wages they are owed. DOL hailed the development of this technology as “significant because, instead of relying on their employers’ records, workers now can keep their own records.” The application is available in both English and Spanish. The DOL also provides a printable work hours calendar in English and Spanish for those workers who do not have smartphones. 

Both the smartphone application and the printable calendar will allow users to track regular work hours, break time and any overtime hours for one or more employers. The application also will allow users to add comments to the information; view a summary of their work hours in a daily, weekly, and monthly format, and e-mail the summary of work hours and gross pay as an attachment. Currently, the app is compatible with only the iPhone and iPod Touch. The DOL intends to explore expanding the program to other smartphones such as the Android and the Blackberry, as well adding pay features that would track tips, commissions, bonuses, deductions, holiday pay, pay for weekends, shift differentials, and pay for regular days of rest.

DOL Review Board Upholds Debarment of Construction Contractor under Davis-Bacon Act for Worker Misclassification and Non-Payment of Wages for Time Worked

The Department of Labor’s Administrative Review Board ( “ARB” ) recently upheld an ALJ’s determination that a New York contractor violated the Davis-Bacon Act and related laws by “willful underpayment of wages due to misclassification of workers and failure to pay for all hours worked.” Pythagoras General Contracting Corp. v. Administrator Wage and Hour Division, DOL, ARB Nos. 08-107, ALJ No. 2005-DBA-14 (ARB Feb. 10, 2011) (as reissued Mar. 1, 2011). The ARB’s decision also upheld the ALJ’s decision to debar the contractor from obtaining future federal contracts for up to 3 years and increased the penalty awarded by the ALJ from $447,670 to $792,397, finding that the contractor failed to rebut the Wage and Hour Division’s ( “WHD” ) calculations of back pay.

The Davis-Bacon Act and related acts (known collectively as the DBRA) require that contractors pay no less than the prevailing wage rates determined by WHD to various classifications of mechanics or laborers they employ. The DBRA also requires contractors to keep accurate payroll records.

The case stems from an investigation conducted by the WHD between 2002 and 2004 after the agency received complaints that the contractor was not paying prevailing wages. The investigation concluded that the contractor failed to pay prevailing wages by misclassifying several employees as performing the work of laborers rather than mason tenders and carpenters and failing to compensate the employees for work performed prior to their scheduled start time. This pre-shift compensable time was spent gathering materials and tools and receiving work assignments.

The ARB’s decision relied heavily on the burden-shifting framework set forth in Anderson v. Mt. Clemens Pottery Co., 328 U.S. 680 (1946). Under Mt. Clemens, the WHD administrator, as the party bringing the case, had the initial burden of proving that employees performed work for which they were improperly compensated. The burden then shifted to the contractor who had the burden to “negate the reasonableness of the inference to be drawn from the employee’s evidence.”  The contractor contested that the administrator’s evidence of limited employee testimony regarding misclassification of employees as labors and the performance of compensable activities before the scheduled work day began had established a reasonable inference. The ARB instead ruled that in light of the contractor’s incomplete and inaccurate payroll records, some of which had been discarded, the employee testimony was not refuted and could be relied upon to serve as the basis of an award for even non-testifying workers.

The contractor’s failure to maintain complete and accurate records also played a key role in its debarment.  The “incomplete and inaccurate records” that “reflected the misclassification of its workers” showed a willful violation of the act, as did the contractor’s failure to correct violations despite being placed on notice by the WHD’s investigation in 2002.

President Obama Proposes Overall Budget Cut for Department of Labor in FY2012, Increase for OSHA

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On February 14, the Obama administration unveiled a $108.5 billion proposed budget for the Department of Labor for fiscal year 2012. The proposed budget would reduce DOL’s total budget by $40 million from the fiscal year 2011 budget, which is currently being funded by a recently enacted continuing resolution that will expire early next month.

The administration’s FY2012 budget calls for a significant increase for worker protection programs, including $240 million for the Wage and Hour Division (WHD), up from its current budget of $227.6 million. The budget allocates almost $50 million to a new multi-agency misclassification initiative aimed at coordinating federal and state efforts to combat the misclassification of employees as independent contractors. WHD’s budget includes $15 million for such misclassification investigations.

Notably, the budget requests $583.4 million for the Occupational Safety and Health Administration, an increase of a $24.8 million, or 4.4 percent, from fiscal year 2011. OSHA’s standard-setting directorate would receive $26 million, an increase of $36.8 percent from current funding levels. This $7 million increase includes $2.4 million to continue developing OSHA’s Injury and Illness Prevention Program rule, which aims to assist employers reduce workplace injuries by increasing their responsibilities for proactively identifying and fixing hazards in their workplaces.

In addition, the President’s budget requests $227 million for OSHA’s federal enforcement activities, an increase of 5.8 percent. The proposal would allocate $21 million for whistleblower protections, which would be separated out from enforcement, a change which OSHA claims would enable it to more easily track and report the resources used in the whistleblower program. According to OSHA, the funding would provide resources for 45 whistleblower investigators and 25 new inspectors.

Additional information concerning the President’s proposed FY2012 budget for the Department of Labor is available on the DOL’s website.

OLMS Rolls Out New Persuader Reporting Orientation Program

The Department of Labor’s Office of Labor-Management Standards (OLMS) has announced the initiation of a new Persuader Reporting Orientation Program (PROP) designed to assist employers and labor relations consultants in complying with the reporting obligations of section 203 of the Labor-Management Reporting and Disclosure Act (LMRDA).

Section 203 requires employers and labor relations consultants to file reports with OLMS concerning plans or agreements to persuade employees about their rights to organize and bargain collectively. Certain exception apply to the reporting requirements, including the “advice exception,” under which no report is required covering the services of a consultant or other person by reason of his or her giving or agreeing to give advice to an employer, or representing or agreeing to represent the employer in administrative, arbitral, or court proceedings or in collective bargaining. 

Using the contact information for employers and their representatives obtained from representation petitions filed with the National Labor Relations Board, OLMS will send an orientation letter to the employers and to their representatives with information about potential reporting obligations under the LMRDA, as well as reporting forms and instructions.

Obama Resubmits Two Labor Nominations to Senate

President Obama resubmitted two nominations to the Senate for labor posts after the Senate failed to act upon the nominations before the close of the 111th Congress. On January 5, Obama resubmitted the nominations of Leon Rodriguez to be Administrator of the Department of Labor’s Wage and Hour Division (WHD) and Thomas M. Beck to be a member of the National Mediation Board (NMB).

Rodriguez was originally nominated to be WHD Administrator on December 3. Currently, Rodriguez serves as Deputy Assistant Attorney General and Chief of Staff in the Civil Rights Division at the Department of Justice.  Rodriguez is Obama’s second nominee for the position of WHD Administrator after his first nominee, Lorlei Boylan, withdrew herself from consideration in October 2009. 

Beck was originally nominated to serve on the NMB in September. He is slated to replace fellow Republican Elizabeth Dougherty, whose term on the NMB ended in June. Dougherty continues to serve pending her replacement. Currently, Beck serves as a member of the Federal Labor Relations Authority (FLRA), to which he was nominated by President Bush in October 2008.

President Obama Announces Nominee for Wage and Hour Division Administrator

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On December 2, 2010, President Obama announced his intention to nominate Leon Rodriguez to the position of Administrator of the Wage and Hour Division (WHD) of the U.S. Department of Labor, a post that has remained vacant during the Obama administration. Currently, Rodriguez serves as Deputy Assistant Attorney General and Chief of Staff in the Civil Rights Division at the Department of Justice, where he oversees the operations of the Division and leads the Division’s work on immigration and national-origin related matters. Rodriguez is Obama’s second nomination for the position of WHD Administrator. Obama’s first nominee, Lorlei Boylan, withdrew herself from consideration in October 2009 after her nomination received opposition, and her confirmation vote was postponed.

Before joining the Civil Rights Division, Rodriguez served as the County Attorney for Montgomery County, Maryland, from 2007 to 2010. Prior to his appointment as County Attorney, he spent several years in private practice at the law firm Ober, Kaler, Grimes & Shriver, where his practice focused on white-collar and health law. From 1997 to 2001, Mr. Rodriguez served first as an Assistant U.S. Attorney in Pittsburgh, Pennsylvania and later as First Assistant U.S. Attorney. From 1994 to 1997, he worked as a trial attorney in the Criminal Section of DOJ’s Civil Rights Division, specializing in prosecuting law enforcement misconduct, racial violence, and human trafficking. Rodriguez began his legal career in 1998 as an Assistant District Attorney in the Kings County District Attorney’s Office in New York.

New NLRA Posting Requirements for Federal Contractors and Subcontractors

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The Department of Labor has issued a final rule implementing President Obama’s Executive Order 13496 of January 30, 2009, which aims to ensure that “workers employed in the private sector and engaged in activity related to the performance of Federal government contracts are informed of their rights to form, join, or assist a union and bargain collectively with their employer.” Effective June 21, 2010, federal contractors and subcontractors are required to post a new DOL notice informing employees of their rights as employees under the National Labor Relations Act.

The notice informs employees of their rights under the NLRA to organize and bargain collectively with their employers and to engage in other protected concerted activity, provides examples of illegal conduct by employers and unions, and provides contact information for the National Labor Relations Board.  Federal contractors and subcontractors must post the notice in “conspicuous places in and about its plants and offices” where employees covered by the NLRA perform contract-related activity, including all places where notices to employees are customarily posted both physically and electronically. 

An employee performs contract-related activity if the duties of the employee include work that fulfills a contract obligation, is necessary for fulfillment of the contract’s provisions, or the cost or portion of the cost of the employee’s position is an allowable cost of the contract. Employers with a significant number of employees who are not proficient in English must post a version of notice in the languages spoken by employees. The Office of Labor-Management Standards (OLMS) has provided versions of the notice that comply with the physical and electronic posting requirements in English, Spanish, and Mandarin Chinese.

Employee Misclassification Prevention Act (H.R. 5107, S. 3254)

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Core Provisions: This legislation would amend the Fair Labor Standards Act (FLSA) to strengthen enforcement and penalties for misclassification of employees as independent contractors. 

The bill creates new record-keeping requirements and requires employers to provide notice to employees and those classified as non-employees (1) of their classification, (2) that their rights to “wage, hour, and other labor protections” depend upon proper classification, and (3) directing them to the Department of Labor for further information about the rights of employees.  Failure to keep the required records or provide the required notice would create a rebuttable presumption that an individual who is remunerated for the performance of labor and services by an employer is an employee of that employer.

The legislation would impose civil penalties of up to $1,100, or up to $5,000 for repeated or willful violations, for each misclassification or violation of the record-keeping or notice provisions. If a misclassification accompanies violations under the FLSA’s maximum hours or minimum wage requirements, a worker could recover double his or her liquidated damages.

The legislation would also require state unemployment insurance agencies to conduct auditing and investigative programs to detect employers that misclassify or fail to properly report compensation to workers with the effect of excluding employees from unemployment compensation coverage. Additionally, the legislation would require the DOL to target industries it determines to have frequent incidence of misclassifying workers for audits.

Secretary of Labor Hilda Solis issued a statement supporting the bill and affirming the DOL’s committing to targeting worker misclassification.

Status: H.R. 5107 was introduced by Rep. Woolsey (D-CA) on April 22, 2010, and referred to the House Committees on Education and Labor and Ways and Means.  S. 3254 was introduced by Sen. Brown (D-OH) on April 22, 2010 and was referred to the Committee on Health, Education, Labor, and Pensions.  Both the House and Senate introduced similar bills in the 110th Congress, but both bills failed to make it out of committee.