Injunction on Overtime Regulations

For the third time in less than 30 days, a federal court has blocked an Obama Administration change to the nation’s employment and labor laws from going into effect.

On Tuesday, November 22nd, a federal district court in Texas issued a nationwide preliminary injunction blocking the new overtime eligibility regulations, which would have raised the salary threshold to $47,476 from the previous $23,660, from going into effect on December 1st as planned.

The court held that the Department of Labor (DOL) lacked the authority to change the threshold.  Rather, the court held that the exemption from overtime eligibility was based on the duties performed, not on the basic salary threshold.

Therefore, at the moment, none of the current practices regarding eligibility for overtime will change as of December 1st.  However, it is probable that the DOL will challenge the ruling to the Fifth Circuit Court of Appeals.  Whether the Court rules on the appeal prior to the change in Administrations remains to be seen.  If it does not, the new Administration can choose to either push the appeal, decline to push the appeal, or entertain new legislation rolling-back the change, which would make the appeal moot.

Employers who have already made changes in anticipation of the rule going into effect will need to evaluate those changes to determine whether they should remain in place or possibly be rescinded.

We will keep you posted of further developments with the injunction.

Fair Pay Injunction

In a significant “win” for federal contractors and subcontractors, a federal district court in Texas has issued a nationwide preliminary injunction against the implementation of the requirements to disclose labor law violations as well as the anti-arbitration provisions contained in the Fair Pay and Safe Workplaces regulations and guidance that were to be effective October 25, 2016.  The FAR Council and the U.S. Department of Labor issued the regulations and guidance on August 25, 2016.

The Court held that the Plaintiffs challenging the rule had demonstrated:  1) a substantial likelihood of success on the merits; 2) a substantial threat of irreparable injury; 3) that the threatened injury outweighs any damage the injunction would cause the Defendants; and 4) that the order will not be adverse to the public interest.

Specifically, the Court held:

  1. That the Executive Order, FAR Rules, and DOL Guidance, separately and together, exceeded the President’s, FAR Council’s, and DOL’s authority and are otherwise preempted by other federal labor laws.
  2. That the Executive Order, the FAR Rules, and the DOL Guidance violate the First Amendment in that they “compel speech.”
  3. That the Executive Order, the FAR Rules, and the DOL Guidance violate the Due Process Rights of Government Contractors and Offerors.
  4. That the New Rule and Guidance are arbitrary and capricious and entitled to no deference.
  5. That the Executive Order and FAR Council Rule violates the Federal Arbitration Act.

What this means is that for the time being, and pending further legal actions, federal contractors and subcontractors do not have to comply with the provisions of the regulations or guidance that were to be effective October 25, 2016.  These provisions and guidance relate to disclosing labor law violations or amending ADR programs as connected to Title VII, Sexual Harassment or Assault claims.

However, the Court did not enjoin the implementation of the Paycheck Transparency requirements that will still be effective January 1, 2017.  Contractors and subcontractors must continue to prepare to comply with this section, if applicable.

We will continue to monitor developments with this action and will notify you of any updates.

New Federal Overtime Regulations Released Effective December 1, 2016


New regulations changing the Fair Labor Standards Act (FLSA) regarding eligibility for overtime were published on May 17, 2016 by the U.S. Department of Labor (DOL). The FLSA sets rules governing minimum wage and eligibility for overtime. 

The changes consist of:

1.      A new minimum salary threshold before applying the  Executive, Professional or Administrative “Duties Test” of $47,476 annually ($913 per week), up from the current threshold of $23,660 annually ($455 per week).

2.    Up to 10% of the annual amount can consist of bonuses/commissions.  So, an individual making $45,000 annually but receiving a 10% bonus ($4,500) would meet the new threshold as their total pay would be $49,500, which exceeds the new $47,476 threshold.

3.       The effective date for the new regs is December 1, 2016.  This gives employers slightly more than six (6) months to complete their implementation strategy.

4.       The automatic adjustment to the salary level will now occur every three (3) years as opposed to annually.

5.       There has been no change to the Duties Test for Executive, Professional or Administrative employees. 

6.      The threshold for the Highly Compensated Employee exemption is now $134,404 annually.

This means that an individual must earn at least the new annual threshold ($47,476) before application of the FLSA’s “duties” exemption test can be considered. The “duties” test evaluates whether the individual meets one of the Executive, Professional, or Administrative exemptions. Continue reading New Federal Overtime Regulations Released Effective December 1, 2016

EEOC Proposes Adding Pay Data Collection to EEO-1 Report

On February 1, 2016, the EEOC published in the Federal Register proposed regulations to require employers with 100 or more employees to submit pay data along with their regular EEO-1 reports.  The proposed changes would be effective with the EEO-1 filing for September 2017.  The proposal also ends any efforts on the part of the OFCCP to implement their own compensation data collection protocol.

While the EEO-1 would continue to collect gender/race/ethnicity data by EEO-1 category, the proposal would require the submission of pay data and hours worked by EEO-1 category and by 12 salary bands mirroring the bands used by the Bureau of Labor Statistics (BLS) in the Occupational Employment Statistics Survey.  Employers would not have to provide actual wage data.  Rather, they would be required to report how many employees, broken down by gender/race/ethnicity, had W-2 earnings by EEO-1 category and salary band.  In addition, employers would have to report total hours worked by the employees in each band by race/gender/ethnicity.

Employers cannot use annual W-2 earnings for the purpose of preparing the report.  Rather, employers would have to perform a 12-month look back from any point between July 1st and August 31st.    In the proposal, the EEOC states that HRIS/payroll systems will allow employers to easily annualize this amount, in essence requiring employers to now come up with a second W-2 report for each employee. Continue reading EEOC Proposes Adding Pay Data Collection to EEO-1 Report

Prohibitions Against Pay Secrecy

As announced last September, OFCCP’s rule on Prohibitions Against Pay Secrecy Policies and Action is now effective.  The rule applies to new or modified federal supply and service contracts and subcontracts, as well as federally assisted construction contracts of more than $10,000 in value entered into or modified on or after the effective date of January 11, 2016.  It also applies to contracts or subcontracts that, in the aggregate, total more than $10,000, or financial institutions holding federal funds, or who are issuing and paying agencies for U.S. savings bonds in any amount.

The rule prohibits federal contractors and subcontractors from discriminating against employees and applicants who discuss, inquire about, or disclose information regarding compensation acquired through ordinary means, such as a discussion between coworkers or through an anonymous note from a coworker.  Compensation consists of all items currently defined by the OFCCP including elements such as base pay, commissions, bonuses, stock options, incentives, overtime, shift differentials, vacation and holiday pay, etc.  The rule does not require employers to disclose information regarding compensation in response to a demand from an employee or an applicant.

Continue reading Prohibitions Against Pay Secrecy

New Posting & Notice Requirements – CORRECTION

This is a correction to last week’s New Flash on new posting and notice requirements under the “Pay Secrecy” regulations. In last week’s release, it was stated that additional verbiage was required to incorporate by reference the new regulatory language into contracts and purchase orders.
This was incorrect. No new language is required. Rather, the existing reference to 41 C.F.R. Part 60-1.4 will meet the incorporation by reference obligation.

The recommended language appears below:

As applicable, the provisions of the Equal Opportunity Clauses pursuant to Section 202 of Executive Order 11246, as amended, and 41 CFR Section 60-1.4; as well as 29 C.F.R. Part 471, Appendix A to Subpart A, are herein incorporated by reference. Further, sellers who (1) are not otherwise exempt as provided by 41 CFR 60-1.5, (2) have 50 or more employees and, (3) have a contract, subcontract or purchase order amounting to $50,000 that is necessary to the completion of a covered federal contract or subcontract are hereby notified of their obligations to file EEO Standard Form 100 and to prepare an affirmative action plan(s) as required under the regulations set forth above.
This contractor and subcontractor shall abide by the requirements of 41 CFR §§ 60-300.5(a) and 60-741.5(a). These regulations prohibit discrimination against qualified individuals on the basis of protected veteran status or disability, and require affirmative action by covered prime contractors and subcontractors to employ and advance in employment qualified protected veterans and individuals with disabilities.

We apologize for any confusion or inconvenience caused by this error.

Reminder: New Posting And Notice Requirements

This is a reminder that there are two new notice and posting requirements under recent OFCCP regulations. The first is adding the “EEO is the Law” Poster Supplement to comply with the LGBT Discrimination and Pay Secrecy regulations. The LGBT discrimination regulation was effective April 8, 2015 and applies to either new contracts entered into or contracts modified after that date. The regulation requires the addition of “Sexual Orientation/Gender Identity” as prohibited bases of discrimination. EEO policies in employee handbooks, union contracts and policy statements posted on bulletin boards must be updated to include these bases.

These bases must also be added to the “EEO is the Law” poster. While a new poster has not yet been published, the additional language has been included in a supplement that is to be posted along with the prior version. A copy of the supplement is attached. This should be printed out and posted with the current version of the poster. 

In addition, what was originally called the “Non-Retaliation for Disclosure of Compensation Information” under Executive Order 13665, is now referred to as “Prohibitions Against Pay Secrecy Policies and Actions” in the implementing regulation. This rule forbids contractors from prohibiting employees and applicants from voluntarily sharing information regarding their compensation with each other or from retaliating against employees or applicants if they do share such information. It does not require contractors to divulge pay/compensation information upon request. It also prohibits the disclosure of compensation information by employees who obtain such information as part of their essential job functions. So for example, a human resources supervisor or generalist could not disclose information about someone else’s pay that was obtained in the performance of the HR professional’s job. However, they could disclose information about their own compensation/wages to others. 

This regulation is effective January 11, 2016 and applies to contracts either entered into, or modified after that date. The regulation has two notice/posting requirements. The first is the posting of the “Pay Transparency Policy Statement” on bulletin boards and inclusion of the Statement in employee handbooks, and policies. A copy of the “Pay Transparency Policy Statement” is likewise attached. The statement must be used exactly as written and without modification. 

The second part is the inclusion of the statement in the EEO clause that is included in all covered contracts and subcontracts. Contractors/subcontractors may also meet this obligation through “Inclusion of the equal opportunity clause by reference” in the covered documents. Sample language referencing the EEO Clause is attached. 

In conclusion, while we have not yet seen the OFCCP inquire into the EEO is the Law Poster Supplement, and the pay secrecy rule will not be effective for another two months, it would be prudent for contractors to start preparations to be in compliance as soon as possible.

Threshold For Coverage Under VEVRAA/4212 Increased To $150,000 For A Single Contract

Effective October 1, 2015, the threshold for coverage under Vietnam Era Veterans Readjustment Assistance Act (VEVRAA) increased to $150,000 for a single contract. This means unless a contractor/subcontractor holds a single covered federal contract or subcontract of at least $150,000, they are not required to comply with the provisions of VEVRAA, including the preparation of an affirmative action plan (AAP) for protected veterans, listing covered job opportunities with the appropriate state jobs delivery system, or engaging in outreach for protected veterans.

An infographic published by the OFCCP showing the coverage thresholds for Executive Order 11246, Section 503 of the Rehabilitation Act, and VEVRAA/4212 is attached. Please note that depending on the value of the contract, a contractor/subcontractor may have to prepare an AAP for minorities, females and the disabled, but they may not have to do so for Protected Veterans.

It is recommended that contractors and particularly subcontractors, review the value of their federal contracts/subcontracts to determine whether the value of those contracts meets the jurisdictional threshold amount.

Are Employees of Temporary Staffing Firms Also “Employees” of the Federal Contractor Using Their Services?

If so, What is the Expectation of Including Temporary Employees in a Contractor’s AAP?

Back in October 2014, we published a newsletter article discussing whether the OFCCP had set the stage for claiming that temporaries are employees for affirmative action purposes. The article was in response to an OFCCP frequently asked question (FAQ) published on August 5, 2014 regarding the “Employer-Employee Relationship” that addressed the question of when is an individual treated as an employee for the purpose of inclusion in a contractor’s AAP.

On August 27, 2015, the National Labor Relations Board (NLRB) published a decision in the case of Browning-Ferris Industries of California (“Browning Ferris”), 362 NLRB No. 186 (August 27, 2015). In that decision, the NLRB essentially overturned 30 years of NLRB case law regarding when two entities would be considered “joint employers” for the purpose of collective bargaining obligations.

In short, it is now the position of the NLRB that a joint employment relationship may be found to exist between two unrelated entities “…if they share or codetermine those matters governing the essential terms and conditions of employment…” even if one entity does not hire, fire, supervise or determine the wages and benefits of another employer’s employees. The ability of one entity to exercise control over “…dictating the number of workers to be supplied; controlling scheduling, seniority, and overtime; and assigning work and determining the manner and method of work performance…” will be sufficient to establish “control.”

Continue reading Are Employees of Temporary Staffing Firms Also “Employees” of the Federal Contractor Using Their Services?

New Executive Order Establishing Paid Sick Leave for Federal Contractors

On Labor Day, September 7, 2015, President Obama signed a new Executive Order requiring federal contractors and subcontractors to offer up to 7 days (56 hours) or more, of paid sick leave each year, depending on the number of hours worked. Employees will earn 1 hour of paid sick leave for every 30 hours worked. The order also specifies that this leave can be used not only for illness or care of the employee, but also to care for a sick or injured family member. In addition, the order mandates that unused sick time be carried over to the next year. It also requires that employees rehired after a separation of less than one year have their sick time reinstated upon rehire. Lastly, the EO states that the paid sick leave cannot be conditioned upon the employee finding a replacement to cover their absence.

The EO is scheduled to take effect January 1, 2017, and instructs the Secretary of Labor to have implementing regulations completed by September 30, 2016. As such, the new paid sick leave benefits will apply to new contracts entered into on or after January 1, 2017.

Employees are supposed to request leave at least 7 calendar days in advance when the need for leave is foreseeable or as soon as is practicable. Employers may only require certification from a healthcare provider if the need for paid sick leave is for 3 or more consecutive work days.

Continue reading New Executive Order Establishing Paid Sick Leave for Federal Contractors

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