Ivo is a partner in Obermayer’s Labor Relations & Employment Law Department. He focuses his practice on representing employers, including advising companies on how to handle employee issues, and defending employee claims...Read More by Author
Wage and Hour Update – Federal and Local Laws on the Chopping Block
During the Obama administration, federal agencies enacted wage and hour regulations that tended to favor employees, even while the federal minimum wage remained unchanged. State and local governments also played a role, moving forward with laws and ordinances governing wages and paid leave.
With the Trump administration already making its mark with executive orders and cabinet appointments, many wage-related provisions may soon be reversed at the national level. Meanwhile, closer to home, Philadelphia’s paid sick leave law may be rolled back by the Pennsylvania legislature.
This post will summarize the current status of regulations that may be headed for reversal, and summarize the potential impact on employers.
Federal Overtime Rule in Jeopardy
Since its announcement in May of 2016, HR Legalist has been following the Department of Labor’s new overtime rule, which would have more than doubled the salary threshold for the “white collar” exemptions to overtime (from $23,660 per year to $47,476 per year) and substantially increased the number of office workers and managers entitled to overtime pay. However, on November 22, 2016, about a week before the rule was set to go into effect, the rule was blocked by a federal judge in Texas.
In December of 2016, the DOL appealed the injunction that put the new rule on hold. However, there was not enough time for all of the parties to file briefs with the Fifth Circuit Court of Appeals before Inauguration Day. On January 25, 2017, the Department of Justice requested an extension of time to file its reply brief on behalf of the federal government, to “allow incoming leadership personnel adequate time to consider the issues.” This most recent request may signal the end for the overtime changes, as government attorneys under the Trump administration may decide not to defend the rule.
Wage Rules Applicable to Federal Contractors
On January 31, 2017, the White House issued a statement indicating that President Trump will continue to enforce President Obama’s 2014 executive order barring discrimination against LGBT employees of federal contractors. However, other executive orders regarding federal contractors may be reversed.
For example, in February of 2014, President Obama issued an Executive Order establishing a $10.10 hourly minimum wage for employees of federal contractors (the rate was tied to inflation and has since increased to $10.20 per hour). In September of 2016, the DOL issued a Final Rule implementing President Obama’s executive order mandating paid sick leave for federal contractors. The Order and Final Rule require that for all federal contracts issued after January 1, 2017, federal contractors must provide employees with one hour of paid sick leave for every thirty (30) hours worked, up to 56 hours each year.
For now, these rules remain in full effect. However, given President Trump’s statements about eliminating regulations that increase costs on businesses, federal contractors should keep an eye out for changes in this area.
The Future of Agency Rulemaking
In addition to the above developments, a bill is pending in Congress that could shift the balance of power in Washington in the areas of employment law and beyond. Last month, the House of Representatives passed the Regulations from the Executive in Need of Scrutiny (REINS) Act of 2017, which would require Congress and the President to approve all “major rules” developed by federal agencies (including all rules that would impose at least $100 million a year in costs to the US economy). If enacted by the Senate and signed into law, this law could make it more difficult for executive agencies, such as the Department of Labor, the EEOC, and the National Labor Relations Board, to finalize and enforce new labor and employment rules.
Philadelphia’s Paid Sick Leave Law may be Pre-empted by State Law
Local provisions may be in flux as well. Since May of 2015, Philadelphia’s Paid Sick Leave Ordinance has required private employers with 10 or more employees to provide at least 40 hours of paid sick leave to their employees located in Philadelphia. However, a group of state Senators recently announced that they were re-introducing legislation that would prevent municipalities from passing paid leave ordinances, on the grounds that such ordinances hurt small businesses and would force larger businesses with multiple locations to comply with various different rules. That bill, SB128, was introduced in January and is now pending in the State Senate. This new bill will not impact Philadelphia’s Ban the Box or Wage Equity ordinances, both of which place specific limitations on Philadelphia employers.
Other states such as Wisconsin, Arizona and Florida, have already passed statewide laws preventing cities and other local governments from passing sick leave ordinances. Still, paid sick leave is already the law in many cities, including: New York City, Washington D.C., San Francisco and Los Angeles. In July of 2017, Chicago’s new sick leave ordinance will go into effect.
Recommendations for Employers
These developments suggest that the pendulum is now swinging back towards less regulation on employers in the area of wages and leave, and in the area of employment law as a whole. However, employers should exercise caution before rolling back any employee-friendly policy changes. Any cost savings gained by potential changes could be offset by decreased employee morale and loss of talent.