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Washington Labor & Employment Wire » On The Hill

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.


NLRB Brings Complaint Against Boeing; Critical Senate Republicans Introduce Right-to-Work Legislation in Response


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On April 20, 2011, NLRB Acting General Counsel Lafe E. Solomon issued a complaint against the Boeing Company for its transfer of aircraft production jobs from the state of Washington to South Carolina in violation of Sections 8(a)(1) and 8(a)(3) of the National Labor Relations Act (”NLRA”). The complaint follows an unfair labor practice complaint brought by IAM in March 2010 and asserts that by opening a new production line in North Charleston, SC rather than the Puget Sound area of Washington State, Boeing is engaging in anti-union discrimination with regard to hiring and employment and unlawfully interfering with, restraining or coercing its employees in their exercise of their NLRA rights.

In conducting an investigation and bringing the complaint, the NLRB referenced numerous statements made in the press by Boeing officials concerning the desire to set up the production line in a non-union setting. In particular, one high-level Boeing official was reported to have told the Seattle Times that “[t]he overriding factor (in locating the work in South Carolina) was not the business climate. And it was not the wages we’re paying today. It was that we cannot afford to have a work stoppage, you know, every three years.” Boeing production lines in the Puget Sound, WA area have been plagued by periodic strikes in the past.

In a statement issued by its Executive Vice President and General Counsel J. Michael Luttig, a former federal judge, Boeing emphatically contested the complaint, arguing that establishing a new production line in South Carolina did not represent a removal or transfer of work from Puget Sound or otherwise adversely affect any union employees. Boeing also asserted that the NLRB mischaracterized the statements of its officials, and that the company considered only permissible factors in locating the production line in South Carolina.

The filing of the NLRB complaint brought condemnation from Senate Republicans, who contended that the action improperly interfered with the ability of businesses to operate in right-to-work states and would force companies to instead move jobs overseas. The NLRB complaint prompted Sen. Lamar Alexander (R-TN) and South Carolina’s two Republican Senators, Sen. Jim DeMint and Sen. Lindsey Graham, to announce that they would soon unveil the Right to Work Protection Act, which would bar the NLRB or union contracts from overriding right-to-work laws and halt NLRB actions such as the Boeing complaint. The bill, which is unlikely to pass the Democratic-controlled Senate, would prohibit federal government from engaging in enforcement actions against companies electing to relocate to right-to-work states or from disadvantaging work located in right-to-work states when awarding federal government contracts.

The complaint also brought condemnation from the Republican state attorneys general of nine right-to-work states, who called on the NLRB to drop the complaint: Alabama, Arizona, Florida, Georgia, Nebraska, Oklahoma, South Carolina, Texas, and Virginia.

Both parties will be able to present evidence and arguments concerning the NLRB complaint in a June 14, 2011 hearing in Seattle, WA before an NLRB administrative law judge.

NLRB Acting General Counsel Solomon was nominated by President Obama earlier this year to a four-year term as General Counsel on a permanent basis. His nomination is currently pending in the Senate.


Employment Non-Discrimination Act (H.R. 1397)

Core Provisions:  On April 6, 2011, Rep. Barney Frank (D-MA) reintroduced the Employment Non-Discrimination Act (ENDA), which would prohibit discrimination on the basis of an individual’s actual or perceived sexual orientation or gender identity in decisions regarding hiring, firing, compensation, and other terms, conditions, or privileges of employment.  Employers also could not adversely limit, segregate, or classify employees or applicants because of actual or perceived sexual orientation or gender identity.  In addition, the Act would make it an unlawful employment practice for an employer to discriminate based on actual or perceived sexual orientation or gender identity of a person with whom the employee associates, and prohibits retaliation against employees for exercising their rights under the Act.  The Act would apply to employers with 15 or more employees, but there is an exemption for religious employers and armed forces.

Rep. Frank introduced similar legislation in the 110th Congress, which failed to pass in the Senate, and in the 111th Congress, which failed to make it out of committee. 

Status: Rep. Frank reintroduced the bill with 117 co-sponsors on April 6, 2011.  It was referred to the House committees on Education and Workforce, Administration, Oversight and Government Reform, and the Judiciary on the same day. 


DOL Clarifies FLSA Tip Credit, Declines to Amend Regulations Governing the Fluctuating Workweek


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            On Tuesday, April 5, 2011, the Department of Labor (DOL) published updated regulations to the FLSA that were intended to conform the Act to subsequent legislation. The regulations were initially proposed in 2008 under the Bush administration. While the final rule updates regulations regarding the tip credit to reflect an increase in the minimum wage and clarifies existing overtime exemptions for employees engaged in fire protection activities, the rule is more interesting for what it does not do. In response to negative comments from employee groups, DOL opted not to adopt changes that would have clarified that salaried, non-exempt employees could receive bonuses under the fluctuating work week method of compensating overtime. 

            In addition to raising the maximum federal tip credit to $5.12 per hour, the final rule eliminated the maximum contribution percentage on valid mandatory tip pools. Notably, however, the DOL did not adopt a proposed regulation clarifying that bona fide bonus or premium payments do not invalidate the fluctuating workweek method of compensation. This proposal had been supported by the Chamber of Commerce, among other pro-employer entities. Commenters opposed to the proposed rule argued that it would allow employers to reduce employees’ fixed weekly salaries and instead provide compensation primarily through bonus and premium pay. The DOL noted that “in general, commenters representing employers favored the revisions while commenters representing employees strongly opposed the revisions.”

            DOL had also proposed a change to clarify that under section 7(o) of the FLSA, states and local governments that grant employees compensatory time off instead of cash overtime compensation must allow employees to use the compensatory time off on the date requested absent undue disruption to the agency. This clarification was not adopted in the final rule, but DOL reiterated that it maintains its longstanding position that employees are entitled to use compensatory time on the date requested. The final rule also does not include several other provisions originally proposed including providing an overtime exemption for service managers, service writers, service advisers, and service salesman; a regulation that allows an employer to take a meal credit even where the employee does not accept the meal voluntarily; and, examples of when pay is not required for employees who use their employer’s vehicle in home-to-work commuting.


Republican Senators Urge Obama to Withdraw Becker Appointment to NLRB

On February 3, 2011, in response to President Obama re-nominating Craig Becker to a full five-year term as a member of the National Labor Relations Board, all 47 Republican Senators have co-signed a letter calling upon the White House to rescind his nomination.  Becker, who has served on the Board via recess appointment since March 2010, had previously been nominated by President Obama on multiple occasions in 2009 and 2010, but each time failed to overcome Republican-led filibusters. The Senators allege that Becker has polarized the Board since receiving his recess appointment and criticized the Board’s case decisions and rulemaking since Becker began sitting on the panel. The Senators also reiterated their intent to continue filibustering his nomination.

Becker, the former associate general counsel for the Service Employees International Union (SEIU), has drawn fire from business groups and Senate Republicans since first being nominated by President Obama in July 2009. After the Senate returned his nomination without acting upon it at the end of the 2009 session, was re-nominated him in January 2010. In February 2010, in a rare NLRB nomination hearing before the Senate HELP Committee, Becker was aggressively questioned about his prior pro-labor writings, alleged conflicts of interest relating to his previous employment with the SEIU and the AFL-CIO, and allegations that he would administratively implement pro-labor regulations while serving on the board, including elements of the proposed Employee Free Choice Act (”EFCA”). Becker’s testimony did not assuage Senate Republicans and a cloture vote on his nomination failed on February 9, 2010.

With the Board down to two members, President Obama on March 27, 2010 provided recess appointments to Becker and Democratic labor lawyer Mark Pearce, who has since been confirmed to a full term. As a Board member, Becker has been a consistent pro-labor vote, but has not pursued sweeping EFCA-style policy changes via rule-making, as some critics alleged he would. Becker also has recused himself from a number of cases involving SEIU, its locals, and the AFL-CIO, but his critics have urged recusals from more cases involving SEIU and AFL-CIO affiliates.

The NLRB currently has a 3-1 Democratic majority, including Becker. As a recess appointee, Becker will leave the Board at the end of 2011. Senate confirmation to a full term would extend his term through the end of 2014.  In January, President Obama nominated Republican NLRB lawyer Terence F. Flynn to the fill the Board’s final vacancy. Flynn’s nomination awaits Senate action.


President Obama Re-Nominates Craig Becker to NLRB

On January 26, 2011, President Obama re-nominated Craig Becker to a full five-year term as a member of the National Labor Relations Board. Becker, who has served on the Board via recess appointment since March 2010, has previously been nominated by President Obama on multiple occasions in 2009 and 2010, but each time failed to overcome Republican-led filibusters. As a recess appointee, Becker will leave the Board at the end of 2011. Senate confirmation to a full term, unlikely in light of recent gains by Senate Republicans in the 2010 election, would extend his term through the end of 2014.

Becker, the former associate general counsel for the Service Employees International Union (SEIU), has drawn fire from business groups and Senate Republicans since first being nominated by President Obama in July 2009. After the Senate returned his nomination without acting upon it at the end of the 2009 session, was re-nominated him in January 2010. In February 2010, in a rare NLRB nomination hearing before the Senate HELP Committee, Becker was aggressively questioned about his prior pro-labor writings, alleged conflicts of interest relating to his previous employment with the SEIU and the AFL-CIO, and allegations that he would administratively implement pro-labor regulations while serving on the board, including elements of the proposed Employee Free Choice Act (”EFCA”). Becker’s testimony did not assuage Senate Republicans and a cloture vote on his nomination failed on February 9, 2010.

With the Board down to two members, President Obama on March 27, 2010 provided recess appointments to Becker and Democratic labor lawyer Mark Pearce, who has since been confirmed to a full term. As a Board member, Becker has been a consistent pro-labor vote, but has not pursued sweeping EFCA-style policy changes via rule-making, as some critics alleged he would. Becker also has recused himself from a number of cases involving SEIU, its locals, and the AFL-CIO, but his critics have urged recusals from more cases involving SEIU and AFL-CIO affiliates.

The NLRB currently has a 3-1 Democratic majority, including Becker. Earlier this month, President Obama nominated Republican NLRB lawyer Terence F. Flynn to the fill the Board’s final vacancy. Flynn’s nomination awaits Senate action.


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.


Senate Fails to Invoke Cloture on Paycheck Fairness Act

On November 17, 2010, the Senate was unable to carry the requisite 60 votes needed to invoke cloture to overcome a Republican filibuster and proceed to a vote on the Paycheck Fairness Act, S. 3772,  with a final vote of 58 yeas and 41 nays.

The Paycheck Fairness Act, previously introduced in the Senate by Senator Clinton (D-NY) as S. 766 and subsequently reintroduced by Senator Harry Reid (D-NV) on September 13, 2010, would amend the portion of the Fair Labor Standards Act (”FLSA”) known as the “Equal Pay Act.”

The Paycheck Fairness Act would amend the portion of the Fair Labor Standards Act (”FLSA”) known as the “Equal Pay Act” that prohibits differentials in pay between employees of the opposite sex unless those differentials “are based on any other factor other than sex.” Among other things, the bill would require that any pay differential be based only on certain “bona fide factors,” such as education, training or experience, which must also be consistent with “business necessity.” In addition, the bill provides for compensatory damages, and, in certain circumstances, punitive damages for Equal Pay Act claims, provides for opt-out class actions for Equal Pay Act suits under the FLSA, as opposed to opt-in class actions, and requires that the EEOC collect pay information data from employers relating to employees’ sex, race and national origin.  


Senate Scheduled to Vote on Paycheck Fairness Act

On November 17, 2010, the Senate is scheduled to hold a cloture vote on the Paycheck Fairness Act, S. 3772. The Paycheck Fairness Act would amend the portion of the Fair Labor Standards Act (”FLSA”) known as the “Equal Pay Act” that prohibits differentials in pay between employees of the opposite sex unless those differentials “are based on any other factor other than sex.”

The bill amends this language to require that any pay differential be based only on certain “bona fide factors” such as education, training or experience. Such bona fide factors must also be consistent with “business necessity.” In addition, the bill provides for compensatory damages, and, in certain circumstances, punitive damages for Equal Pay Act claims.  The bill also provides for opt-out class actions for Equal Pay Act suits under the FLSA, as opposed to opt-in class actions, and requires that the EEOC collect pay information data from employers relating to employees’ sex, race and national origin.  

The Paycheck Fairness Act was previously introduced in the Senate by Senator Clinton (D-NY) as S. 766. However, no action was taken on the bill. The bill was subsequently reintroduced by Senator Harry Reid (D-NV) on September 13, 2010.  The Paycheck Fairness Act was introducted in the House as H.R. 12, and passed the House by a vote of 256 to 163 on January 9, 2009, the same day that the House passed the Lily Ledbetter Fair Pay Act.  The President has previously indicated his support for the bill. 


Akin Gump Labor and Employment Partner Don Livingston Testifies Before Congress on Legislation to Restrict Use of Credit Checks in Employment


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On September 23, 2010, the House Financial Services’ Subcommittee on Financial Institutions and Consumer Credit held a hearing on H.R. 3149, the Equal Employment for All Act.  The proposed legislation, sponsored by Rep. Steve Cohen (D-TN9) and co-sponsored by 55 other members of Congress, would make it unlawful for an employer to procure a credit report for use in a hiring or promotion decision with limited exceptions, such as for jobs that require a national security clearance, jobs at state and local agencies, and high-level financial positions.

Under existing law, an employer may procure and use credit history information in a hiring or promotion decision only when it can show that the information is “job related for the position in question and consistent with business necessity.” 42 U.S.C. § 2000e-2(k)(1)(A)(I).  Employers must also comply with the Fair Credit Reporting Act, 15 U.S.C. § 1681 et seq., which requires them to provide a credit report and a notice of adverse action to an employee or potential employee before taking adverse action based on that report.  If the employee or potential employee believes that the report contains errors, he or she may dispute the accuracy of information on the report with the reporting agency within a statutorily defined time period.  Further, if the employee or potential employee believes the credit information is not job-related, he or she may challenge the employer’s use of that information with the Equal Employment Opportunity Commission (”EEOC”).

The hearing was lively with representatives from both sides of the aisle along with a panel of witnesses who had opposing views on the proposed legislation.  Proponents of the bill argued generally that credit information is not indicative of a person’s integrity or ability to perform a certain job, and that the use of credit information in hiring has a disparate impact on blacks and other minorities who are statistically more likely than others to have poor credit.

“Using a job applicant’s credit history to deny employment is not fair because personal credit history is not an accurate predictor of job performance,” Representative Cohen said. “We should be doing everything in our power to help people find jobs during these tough economic times - not hinder them.” 

Opponents of the legislation, including the U.S. Chamber of Commerce, argued that credit information is a useful tool for employers and that the current laws sufficiently protect employers and employees alike.  Akin Gump’s Labor and Employment partner Don Livingston testified during the hearing on behalf of the U.S. Chamber of Commerce.

“Existing law provides the best method for ensuring that credit history information is used where justified and eschewed where it is not,” according to Mr. Livingston.  “The principles of equal employment opportunity have served well.  The proposed legislation will serve less well because, except in an artificially narrow set of circumstances, it would needlessly prevent employers from using credit checks that are justified by business necessity.”     

The bill has not yet been put to a formal vote.