© 2011 winston & strawn llp · 2013-08-09 · brought to you by winston & strawn’s ......

A Hostile Regulatory Environment: l i d i idDOL Regulations and Interpretive Guidance,

2010‐2011

Brought to you by Winston & Strawn’s

Labor and Employment Relations Practice Group.

© 2011 Winston & Strawn LLP 2

Today’s eLunch PresentersToday s eLunch Presenters

Gregory JacobLabor and Employment Relations

Washington, D.C.

gjacob@winston [email protected]


D t t f L b ’Department of Labor’sNew Policy Orientation


Key DOL LeadershipKey DOL Leadership

Secretary of LaborSecretary of LaborHilda Solis

D t S tDeputy SecretarySeth Harris

Solicitor of LaborPatricia Smith

Wage and Hour Administrator Lorelei Boylan (withdrawn)

Assistant Secretary for OSHA David Michaels

Assistant Secretary for Employee Benefits

Security Administration

Deputy Assistant Secretary for OFCCP

Patricia Shiu


Security AdministrationPhyllis Borzi

Patricia Shiu

DOL’s Policy OrientationDOLs Policy Orientation

“[T]here is a new sheriff in town.” —Sec. Solis[ ] ff

Stepped‐up enforcement

Less emphasis on compliance assistance

Very aggressive from the top down in pushing legal interpretation and authority

Withdrawal of and overruling of many wage & hour opinion letters Withdrawal of and overruling of many wage & hour opinion letters

Regulatory attempts that have been struck down or have had to be withdrawn

il d d i h d d f i d l b Tilted toward meeting the demands of organized labor


Key Wage & Hour Enforcement Areas


Overtime Exemptions: The Power of DOL Guidance DOL efforts account for less than 10% of total wage & hour enforcement,

but DOL has tremendous power to influence federal courts on exemption issues

Courts will defer to DOL positions even when newly announced in amicus briefs (See Auer v. Robbins, 519 U.S. 452 (1997))

DOL has even succeeded in reversing the decision of a federal Court of Appeals based on a guidance memorandum it issued after the court’s decision (See Long Island Care at Home Ltd v Coke 551 U S 158 (2007))decision (See Long Island Care at Home, Ltd. v. Coke, 551 U.S. 158 (2007))

Where the fact pattern is within the four corners of an opinion letter, “good faith reliance” protection may apply

Otherwise DOL can retroactively change the rules simply by issuing new Otherwise, DOL can retroactively change the rules simply by issuing new interpretive guidance

But in a mortgage loan officer case, DOL recently disclaimed retroactive application where they explicitly overrule a previous position


application where they explicitly overrule a previous position

Overtime ExemptionsOvertime Exemptions

DOL has been taking much narrower positions on: Administrative exemption

Outside sales exemption

DOL’s recent Second Circuit amicus brief in Novartis opined that ppharmaceutical sales reps are non‐exempt:

Not outside sales because no good or service is actually sold

Not administratively exempt because specific instructions were provided for y p p peach aspect of the job, and the “nature and level” of decisions was too low to qualify as “matters of significance”

But note that deference to DOL on this particular issue was rejected by the Ninth Circuit in Christopher v. Smithkline:

History of non‐enforcement by DOL on pharma sales reps

DOL’s regulation merely parroted the statutory language, such thatl l l f d f l d h


a lower level of deference applied to the interpretation

Overtime Exemptions (continued)Overtime Exemptions (continued)

“Administrator’s Interpretations” have replaced Administrator s Interpretations have replaced opinion letters as the primary vehicle for guidance

Administrator’s Interpretation 2010‐1: Mortgage p g gloan officers “typically” not administratively exempt

Primary duty (looking at description, qualifications, training, and t th d) i l A k l i d dipayment method) is sales. Any work analyzing and recommending

options in light of customer needs is merely incidental to the sale.

Resurrects production vs. administrative dichotomy.

States that perform work that aids the general business operations of a customer can still qualify for the administrative exemption, but only if the customer is a company. Work performed to aid the personal interests of individual customers cannot qualify as administrative


interests of individual customers cannot qualify as administrative.

FMLA Leave & Nursing BreaksFMLA Leave & Nursing Breaks

Administrator’s Interpretation 2010‐3: FMLA Leave is pavailable for non‐biological children of domestic partners

DOL notes that the current regulations allow “in loco parentis” FMLA coveragecoverage

To squeeze in domestic partners in, DOL sweepingly interprets “in loco parentis” to include anyone who provides day‐to‐day care or financial support with the intention of assuming parentalfinancial support with the intention of assuming parental responsibilities

Nursing mother breaks under PPACAh f b k f “ bl ” “ Fact sheet requires provision of breaks of a “reasonable time,” “as

frequently as needed,” in a place other than a bathroom

Departing from the normal rule, nursing breaks are expressly made bl f h h


non‐compensable even if shorter than 20 minutes

Technology & Off‐the‐Clock IssuesTechnology & Off the Clock Issues

DOL and plaintiffs’ attorneys are beginning to focus on p y g gcompensation issues created by advancing technology:

Computer log‐in

Blackberries and home e mail Blackberries and home e‐mail

Associated commuting and travel issues

The core set of issues to be considered: Has the employer suffered or permitted the employee to work

beyond scheduled work hours?

How does the concept of the continuous workday apply?p y pp y

Does the “de minimis” doctrine apply?

Did the employer have no means of knowing that the employee was performing uncompensated work?


performing uncompensated work?

Technology ChecklistTechnology Checklist

Are any of your non‐exempt employees required to wait at the beginning of their shifts for a computer or other similar device to “boot up” so that they can perform their job duties?

If so, this is almost certainly compensable time!, y p

The clock generally starts the moment the employee turns the computer or other similar device on.

However, once the employee is on the clock, the employer is entitled to control what the employee does with his or her time. Generally, it is a good practice for employers to minimize waiting time as much as possible, and to attempt to fill the waiting time with other productive work.

T i i i d ti iti ti l h f d it To minimize unproductive waiting time, some employers have found it efficient to assign one employee to turn on many computers each day.


Technology Checklist (continued)Technology Checklist (continued)

Do any of your non‐exempt employees have access to:y y p p y BlackBerries or Personal Data Assistants?

Take‐home laptops?

Remote e mail? Remote e‐mail?

Cell phones?

If you answered “yes” to any of the above, giving the non‐exempt employees access to such technology outside their normal working hours implies they are expected to use that technology at some point for the employer’s benefittechnology at some point for the employer s benefit.

Proceed to the next step.



Are either of the following remedial measures Are either of the following remedial measures feasible? Stop providing access to such technology to non‐exempt employees.

Require non‐exempt employees to pick up the remote work devices at the beginning of each shift and turn them in atdevices at the beginning of each shift, and turn them in at the end of each shift.

If not, proceed to the next step.



Establish a clear, written remote work policy!, p y Have employees record all work‐related time spent using remote

work devices, and compensate them for all of that time.

There are a few options: There are a few options: Establish a daily or weekly de minimis threshold for remote work, and

require employees to record their time whenever it is exceeded. (See ERLJ article for the risk associated with various thresholds )ERLJ article for the risk associated with various thresholds.)

Require employees to secure advance supervisory approval for all remote work. Make it clear that all such work will be paid for, with or without pre approval but that failure to secure pre approval will bewithout pre‐approval, but that failure to secure pre‐approval will be treated as a disciplinary issue.


Independent ContractorsIndependent Contractors

There are no federal wage and hour regulations in this area (yet), but DOLhas initiated a major enforcement initiative in conjunction with the IRS

Misclassification of employees as independent contractors is not itself an FLSA violation, but DOL is looking for ancillary opportunities to weigh in

Consequences can be significant:

Overtime and recordkeeping violations, liability for failure to include in benefit plans, tax liability, unemploymentp , y, p y

Every agency and every state uses a different multi‐factor test, but FLSA“economic realities” test is broadest

Some key factors: Right to control manner and means or Some key factors: Right to control manner and means or performance, personal investment in equipment, other clients?, is work part of employer’s core business?, previous employee?, length of employment, right to terminate at will, basis of payment (per job?)


p y , g , p y (p j )

Unpaid InternsUnpaid Interns

According to DOL, unpaid interns are not employees (and g , p p y (thus don't have to be paid) if all six apply:

Internship provides training similar to vocational school;

The training is for the benefit of the student; The training is for the benefit of the student;

The interns do not displace regular employees, but rather work under the supervision of employees;

The employer derives no immediate advantage from intern work;p y g ;

The interns are not guaranteed a job; and

There is a mutual understanding that no wages will be paid.

Courts typically apply a more lenient “economic reality” test Courts typically apply a more lenient economic reality test that balances intern and employer benefits.

Key: Set up hallmarks of a real educational program!


Proposed Plan/Prevent/Protect RegsProposed Plan/Prevent/Protect Regs

“Employers and others must ‘find and fix’ violations — that is, p y f f ,assure compliance — before a Labor Department investigator

arrives at the workplace. Employers and others in the Department’s regulated communities must understand thatDepartment s regulated communities must understand that the burden is on them to obey the law, not on the Labor

Department to catch them violating the law. This is the heart of the Labor Department's new strategy. We are going to replace ‘catch me if you can’ with ‘Plan/Prevent/Protect.’”

– DOL Spring 2010DOL, Spring 2010


Proposed Plan/Prevent/Protect RegsProposed Plan/Prevent/Protect Regs

NPRM is currently planned for spring 2011, but will likely slipy p p g , y p

The proposed rule is expected to require employers to document and justify in writing the classification of:

All employees considered to be exempt from overtime

All workers considered to be independent contractors

The proposed rule is further expected to require employers to p p p q p yfurnish these documents to employees: A roadmap for the plaintiffs’ bar!

C b i di id l l h d Comments by individual employers on the tremendous burdens that would be imposed by this rule will be essential to efforts to challenge the rule in court


OFCCP Issues


OFCCP’s New Focus on Compensation Discrimination

Approximately one‐third of OFCCP’s enforcement personnel ll b d dwill now be devoted to compensation cases

Compensation cases are much more subjective than hiring cases, because “similarly situated employee groupings”

i j d t llrequire judgment calls OFCCP will be revoking the 2007 Compensation Standards in

order to limit employer defenses, with no plans to replace themthem

Subjectivity is worst in the early stages of investigations, when OFCCP may apply pay grade or cohort analyses to determine potential liabilitypotential liability

Individual OFCCP auditors thus have a tremendous amount of discretion in seeking conciliation!


OFCCP’s New Focus on Compensation Discrimination (continued)

OFCCP has hired significant numbers of additional OFCCP has hired significant numbers of additional investigators: audits are coming!

The keys to limiting exposure:y g p Do a self‐audit, document it, and document the steps you took in response to it

Put your own similarly situated employee groupings together, collect data according to your SSEGs, and then submit the data to OFCCP in your format

Establish record‐keeping practices that clearly document all legitimate factors that explain pay disparities, such as work experience


experience

Veteran Hiring GoalsVeteran Hiring Goals

OFCCP published an NPRM on April 26, 2011. OFCCP published an NPRM on April 26, 2011. Comments are due by June 25, 2011.

The rule would: Require contractors for the first time to establish “hiring benchmarks”

to measure their progress in hiring veterans

Contractors would be required to consult BLS data on veterans, state Contractors would be required to consult BLS data on veterans, state employment service data on veterans, and other information sources in establishing benchmarks

Require contractors to engage in at least three specified types of equ e co t acto s to e gage at east t ee spec ed types oveteran outreach and recruitment efforts each year

Require that all applicants be invited to self‐identify as a “protected veteran” before they are offered a job


y j

Disability Hiring GoalsDisability Hiring Goals

OFCCP issued an advance notice of proposed rulemaking on p p gestablishing additional Affirmative Action Plan requirements for employees with disabilities

127 t i d tl f d l 127 comments received, mostly from concerned employers

Unclear as yet what the substance of an NPRM will look like –but most likely:y

Additional recruiting requirements will be imposed

Additional information collection requirements will be imposed

E l ill b i d t t bli h “ l ” f hi i f Employers will be required to establish “goals” for hiring of persons with disabilities


Questions?


Thank You.


Contact InformationContact Information

Gregory Jacobg yLabor and Employment Relations

Washington, D.C.(202) 282-5769

[email protected]


© 2011 winston & strawn llp · 2013-08-09 · brought to you by winston & strawn’s ......

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