Employers face uncertainty as HR regulations change course

It’s tough enough for businesses to stay compliant with the myriad of state and federal employment laws, but when regulations are reversed, stayed, or questioned, managers are forced to reexamine their employment policies and practices. As the Trump administration attempts to roll back numerous Obama-era regulations, employers face uncertainty from the ever-changing legal landscape. Below are some of the major changes or possible changes in employment-related regulations, which employers should consider in managing their workforces in the face of uncertainty.

Overtime Salary Levels To Be Reexamined

After years of planning an increase in the minimum salary level for exempt status, the U.S. Department of Labor (DOL) has abandoned the previous final overtime rule and is starting over. In late July, the DOL published a Request for Information (RFI) asking employers and other interested parties to weigh in on what the exemption tests should be, signaling a “redo” in the rulemaking process.

Most employers will recall that a new overtime final rule was scheduled to take effect on Dec. 1, 2016, raising the minimum salary level for the executive, administrative, and professional exemptions from the current $455 per week ($23,660 per year) to $913 per week ($47,476 per year).

However, in late November 2016, a federal district judge in Texas issued an order preventing implementation of the rule nationwide. The DOL promptly appealed the injunction, meaning the final rule could go into effect if the appellate court overturned the lower court’s decision. That injunction and subsequent appeal put employers in the tenuous position of deciding whether to move forward with plans to address the new rule and its increased salary levels for exempt employees, put such plans on hold, or even rollback already implemented changes.

After a new Secretary of Labor was appointed earlier this year, it became apparent that the DOL would no longer support the enjoined final rule. In late August, the Texas judge put another nail in the rule’s coffin by invalidating the rule in its entirety as an overreach of the DOL’s authority. That prompted the DOL to dismiss the appeal of the injunction, effectively ending the chances of that rule ever being implemented. Consequently, employers may proceed under the overtime exemption rule that has been in place since 2004, until such time as the DOL publishes a new final rule.

Tip Pooling Regulation

In 2011, the DOL issued a regulation under the Fair Labor Standards Act (FLSA) that prohibited employers from retaining any tips earned by employees, regardless of whether the employer took a tip credit against the federal minimum wage.

This meant that employers of workers who regularly and customarily receive tips, such as wait staff, bellhops, and bartenders, could not redistribute the tips through a tip pooling arrangement with workers who did not normally receive tips, such as cooks, dishwashers, and janitors, or keep any portion of the tips for the business itself. In February 2016, in Oregon Restaurant & Lodging Association v. Perez, the United States Court of Appeals for the Ninth Circuit (which has jurisdiction over Nevada) upheld the DOL’s tip pooling regulation.

In June 2017, however, the United States Court of Appeals for the Tenth Circuit invalidated the same DOL regulation, concluding that if the employer pays its workers at least the $7.25 minimum hourly wage, thereby not taking a tip credit, the employer may retain or redistribute the tips as it sees fit.

As a result, the DOL has stated that it will not enforce its regulation on the retention of employees’ tips with respect to any employee for whom their employer does not take an FLSA tip credit.

The DOL has also indicated that it would seek to revoke the regulation but until that happens (or until the U.S. Supreme Court or Congress resolves the issue), employers with tipped employees should stay abreast of relevant court decisions in their jurisdictions and comply with those decisions.

OSHA Regulations Delayed

Compliance with the Occupational Safety and Health Administration’s (OSHA’s) electronic reporting rule has been delayed until Dec. 1, 2017 to allow the federal agency to further review and consider the rule.

Published on May 12, 2016, the final rule that requires employers to submit workplace injury and illness information online and would make that information available for public viewing was delayed, in part, because the agency’s secure website was not available until August 1st.

However, the rule also included some controversial provisions, such as anti-retaliation rules that limit the use of post-accident drug testing. OSHA has invited public comment on the enforcement deadline, suggesting that it may possibly revise or abandon the rule entirely.

Employers Need To Stay Tuned

Additional employment-related regulations have been quashed recently, including the revision to the EEO-1 report that would have required certain employers to submit pay data by gender, race, and ethnicity as well as the “blacklisting rule” under which federal contractors would have to report labor law violations.

Employers need to pay close attention to what the federal agencies are doing as additional regulations are expected to change in the future.

By Dora Lane is a partner with the law firm Holland & Hart LLP.