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BEIGNETS AND BELTWAY BUZZ

James J. Plunkett – Ogletree Deakins (Washington, D.C.)

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2019 marked return to divided government in Washington, D.C., as Democrats assumed

control of the House of Representatives for the first time in 10 years. Clearly, this means that it is

unlikely that major labor and employment legislation will be signed into law (with, perhaps, an

exception as described herein). However, the federal regulatory policy agenda continues apace,

as the administration races to finalize and lock in place major federal regulations in advance of

the 2020 elections. Set forth below are some of the recent major policy developments impacting

the workplace.

I. Department of Labor

A. Changes to the Overtime Regulations

In its final part 541 overtime rule, the U.S. Department of Labor’s (DOL) Wage and Hour

Division (WHD) set the salary level or amount test at $684 per week/$35,568 per year for

exempt executive, administrative, and professional employees of section 13(a)(1) of the Fair

Labor Standards Act (FLSA). The total annual compensation test for a highly compensated

employee is $107,432. The standard salary level test of $684 is comparable to the amount

proposed earlier this year since the WHD used the same methodology as it applied in the notice

of proposed rulemaking (NPRM). The total annual compensation level for highly compensated

employees of $107,432 is lower than that proposed earlier this year in its NPRM because it is

based on the 80th percentile of weekly earnings of full-time salaried employees nationally. These

new thresholds for exemption from both the overtime and minimum wage provisions of the

FLSA go into effect on January 1, 2020.

In addition to finalizing the salary amount test for exempt employees and the total annual

compensation requirement for highly compensated employees, the final rule also permits

employers to apply non-discretionary bonus and other incentive payments to satisfy up to 10

percent of the standard salary level, provided such non-discretionary payments are paid at least

annually or more frequently. Also in keeping with its proposed rule, the final overtime rule does

not include a provision that automatically would increase the salary level test or total annual

compensation amount on some regular or periodic basis. Most significantly, the final overtime

(part 541) rule does not make any changes to any of the duties tests for these exemptions.

In 2016, employer-aligned interests brought suit to challenge the final overtime rule

issued during the final year of the Obama administration. The litigation was successful, and the

2016 final rule was enjoined by a federal district court in Texas and has never gone into effect.

The 2019 final part 541 rule formally rescinds the 2016 final rule. At this juncture, it is difficult

to predict whether employee advocates will mount a similar legal challenge to this rulemaking.

While several have expressed interest in doing so, almost all of these advocates argue that the

salary level test in the 2019 final rule is insufficient. Instead, they support a salary level

requirement along the lines of that published in the 2016 rulemaking that set the salary level test

at $913 per week/$47,476 per year for exempt executive, administrative, and professional

employees.

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B. Joint Employer and Other Pending Regulations

In addition, the WHD is reviewing comments submitted on three other significant

proposed rulemakings. One NPRM is on the regular rate determination under the FLSA in Part

778 of Title 29 of the Code of Federal Regulations. Specifically, the proposed rule lists perks

and benefits, such as unused paid leave and reimbursed expenses that employers can exclude

when calculating an employee’s regular rate of pay for purposes of calculating overtime. This

proposal is currently being reviewed by the Office of Information and Regulatory Affairs

(OIRA).

The other NPRM addresses joint-employer status under the FLSA, as defined in Part 791.

As expected, the NPRM aims to provide stakeholders with clear, bright-line rules regarding the

circumstances in which an employer may be deemed a joint employer of another company’s

employees. This is the first meaningful proposed revisions to the FLSA’s joint-employer

regulation since it was originally promulgated in 1958.

Finally, on August 15, 2019, the WHD sent a proposal to OIRA that concerns the

fluctuating workweek regulation found in Section 778.114. This rulemaking stems from an

uncompleted effort in the last year or so of the George W. Bush administration to revise the

regulations. Instead, the Obama administration completed the rulemaking, finalizing a rule that

differed from the proposal and limiting the ability of employers to use the fluctuating workweek

methodology to comply with the overtime requirement of the FLSA.

II. National Labor Relations Board

A. Proposed Changes to Election Procedures

On August 12, 2019, the National Labor Relations Board (NLRB) published a notice of

proposed rulemaking (NPRM) with regard to certain of its election and recognition policies. The

issuance of this NPRM is likely the first step in an ongoing overhaul of the agency’s

representation case rules that were the subject of substantial and controversial revision by the

Obama Board. According to the Board, the proposed amendments are designed to “better protect

employees’ statutory right of free choice on questions concerning representation.” The NPRM

proposes three policy changes that are significant, although somewhat limited in scope.

First, the proposed rule would change the Board’s current “blocking charge” policy.

Under the current rubric, a scheduled NLRB election may be postponed if the union files an

unfair labor practice charge that, if sustained, might affect the election results. Unions have often

successfully used the current blocking charge policy to indefinitely postpone a Board-supervised

decertification vote. Under the new rule, the election would proceed as scheduled; however, the

ballots would be impounded pending resolution of the charge and its likely impact.

Second, the new rule would reinstate the Board’s so-called “Dana” policy that provides

employees with notice, and a 45-day “disapproval window” in cases in which a union and

employer agree to voluntary recognition. The Dana policy, which was adopted to minimize the

reach of so-called “top down” organizing efforts in which employees had no vote prior to

recognition of the union, was abandoned by the Obama Board.

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Lastly, the proposed rule would require actual, contemporaneous proof of majority status

before a Section 8(f) contract could be turned into a 9(a) agreement. In the construction industry,

Section 8(f) of the National Labor Relations Act (NLRA) permits employers and unions to enter

into collective bargaining agreements (CBAs) before the union achieves majority status. Either

party may unilaterally terminate the relationship at the end of the contract. By contrast, an

agreement under Section 9(a) of the Act is based on majority status, and the relationship may not

be unilaterally terminated when the contract ends. The proposed rule would require actual

evidence of majority status and eliminate any confusion as to whether the conversion can be

achieved by any alternative method.

The proposed changes will not be finalized until after the Board reviews comments

submitted by the public, including unions, employers, and other interested parties. The 60-day

comment period ended on October 11, 2019.

B. NLRB to Address Offensive Conduct Standard

Over the last eight years or so, the Board has come under criticism for protecting workers

who use profane or racially or sexually charged language in the workplace simply because the

offensive comments were made in a context that included some element of Section 7 activity.

Critics suggest that such decisions conflict with employers’ duties under federal law to provide

workplaces that are free of harassment. In acknowledging this criticism, on September 5, 2019,

the NLRB solicited public input on whether it should “adhere to, modify, or overrule the

standard applied in previous cases in which extremely profane or racially offensive language was

judged not to lose the protection of the National Labor Relations Act (NLRA).” Briefs are due by

November 19, 2019.

C. NLRB Rules on Misclassification

In February 2018, the NLRB asked the regulated community, “Under what

circumstances, if any, should the Board deem an employer’s act of misclassifying statutory

employees as independent contractors a violation of Section 8(a)(1) of the Act?” On August 29,

2019, in Velox Express, Inc., the Board answered that question when it ruled that an employer’s

misclassification of its employees as independent contractors does not, by itself, violate the

NLRA. The decision puts to bed—at least for the time being—the novel “misclassification is a

violation” theory previously advanced by former general counsel Richard Griffin but not

addressed by the Board.

D. NLRB Rules on Employer Property Rights

Coming on the heels of its decision in Bexar County Performing Arts Center Foundation

d/b/a Tobin Center for the Performing Arts, 368 NLRB No. 46 (2019) in which the Board

rebalanced the rights of property owners versus Section 7 rights of employees during a labor

dispute, the NLRB recently issued another pro-employer decision. In Kroger Limited

Partnership I Mid-Atlantic, 368 NLRB No. 64 (2019), issued September 6, 2019, the NLRB

clarified when nonemployee union agents may access an employer’s property to engage in

protests, boycotts, and other organizing activity. The Board held that the employer did not

violate the Act by removing nonemployee union agents who were encouraging customers to

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boycott the retail store from its parking lot. Even though the store had permitted civic and

charitable organizations to solicit and distribute in the parking area and in front of the store, the

Board redefined that applicable discrimination standard under the Act. By so ruling, the Board

overturned a long line of cases holding that such conduct was unlawful disparate treatment and

clarified what factors must be present for a violation of the Act.

Background

The Supreme Court of the United States has held that nothing in the Act compels an

employer to grant nonemployee union agents access to its property. The only recognized

exception, however, is that an employer may not discriminate against nonemployee union agents

by excluding them from its property while allowing “other distribution” on the property. In

Sandusky Mall Company, 329 NLRB 62 (1999), the Board applied this discrimination exception

broadly to permit nonemployee union agents on an employer’s premises if the employer has

allowed “substantial civic, charitable, and promotional activities” by other

nonemployees/organizations. Thus, the Board concluded that because the employer permitted a

variety of charitable and civic organizations to fundraise, collect donations, or distribute

information on its property, it could not ban nonemployee union agents encouraging customers

to boycott the employer’s business.

Even though the U.S. Court of Appeals for the Sixth Circuit denied enforcement of the

Board’s order, the Sandusky standard has controlled Board decisions since 1999, forcing

employers to decide between supporting organizations such as charities or youth groups. In

short, employers had to decide whether supporting these organizations was worth compromising

the employer’s right to limit access to its property to nonemployee union advocates. Indeed, the

Fourth, Second, Seventh, and Ninth Circuits followed the Sixth Circuit’s reasoning and refused

to enforce Board decisions implementing the Sandusky analysis, but the D.C. and Tenth Circuits

have affirmed decisions applying Sandusky. Ultimately, the applicable standard in these cases, at

the Board level, granted access to nonemployee union agents whenever the employer granted

access to civic and charitable organizations.

The New Kroger Analysis

The Board in Kroger noted that National Labor Relations Board v. Babcock & Wilcox

Co. did not provide any definition to the discrimination exception advanced by the court. Thus,

in reviewing the appellate court decisions refusing to enforce the Sandusky analysis, the Kroger

Board reasoned, “[w]hile the courts of appeals that have considered the issue have differed in

their definition of what nonemployee activities are comparable, they are unanimous in the

conclusion that nonemployee protest or boycott activities are not comparable to nonemployee

charitable, civic, or commercial solicitations, and that an employer does not engage in

‘discrimination’ within the meaning of Babcock when it forbids the former but permits the

latter.”

The Board, therefore, announced a new standard applying the Babcock discrimination

exception. An employer unlawfully discriminates against nonemployee union agents when it

treats nonemployee activities that are similar in nature disparately. Thus, synthesizing the

appellate court analyses, protest and boycott activities are not similar enough in nature to

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charitable, civic, or commercials activities to warrant a finding of discrimination. An employer

may ban nonemployee union agents engaging in protest, boycott, or organizing activities if it

also bans similar activities by non-labor groups such as membership drives by fraternal societies

and religious organizations. The Board also determined that its ruling should be applied

retroactively to cases currently pending.

Next Steps

Employers with cases pending on exceptions before the Board where this type of union

access is at issue may want to take action to encourage the General Counsel to apply the new

standard to the case. In light of this new standard, employers may also want to review their no-

access policies for nonemployees to determine what civic or charitable activities they may now

want to permit on their premises without fear of having to provide equal access to union

organizers. Likewise, as a result of this decision, employers can identify organizations that may

wish to engage in organizing (membership) activities and lawfully continue to ban such groups.

III. Equal Employment Opportunity Commission

On September 11, 2019, the Equal Employment Opportunity Commission (EEOC)

announced a new notice of information collection regarding the Employer Information Report

(EEO-1). Through the 60-day notice, the EEOC is seeking authorization to continue collecting

EEO-1 Component 1 data for another three years. The notice, does not, however, request

authorization for the collection of Component 2 data. The new notice also does not affect

employers’ obligations to report 2017 and 2018 Component 2 data by the deadline of September

30, 2019.

60-day notice invites the public to comment on the proposal to continue collecting

Component 1 data, which the EEOC has been collecting since 1966 pursuant to its requirement

on employers to report employee data by job category, ethnicity, race, and sex. The EEOC made

its first request for authorization from the Office of Management and Budget (OMB) to collect

Component 2 data in 2016.

Burden Analysis

The 2016 request to OMB provided a burden analysis supporting the EEOC’s request for

permission to collect Component 1 and 2 data. The most recent notice updated this burden

analysis with regard to Component 1. The new analysis differs from the 2016 analysis by

considering the size of employers and the number of reports they are required to file. According

to the EEOC’s announcement:

Since multi-establishment employers are generally required to file reports for each

of their locations (subject to size limitations) plus a headquarters and consolidated

report, the amount of effort that multi-establishment employers must expend to

comply with the EEO-1 data collection requirements is often greater than the

effort expended by a single-establishment employer. This burden is magnified by

the number of data fields required in a single Component 2 report (3,360 fields)

versus a single Component 1 report (140 data fields).

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After considering “the total number of reports submitted by report type and file types,”

the EEOC estimated an average burden. Under the new methodology, the EEOC’s new estimates

for the burden associated with submitting Component 1 and 2 data is $614 million for 2017 and

$622 million for 2018—increased from its 2016 estimate of $53.5 million for both 2017 and

2018. According to the EEOC’s announcement, “the proven utility of Component 1 to EEOC’s

mission justifies its continued collection” despite the increased burden:

Component 1 EEO-1 data serves as a valuable resource for EEOC’s analysis of

industries and regions as well as for investigators in assessing allegation of

discrimination. Therefore, the EEOC believes that the continued collection of

Component 1 is necessary for the proper performance of the agency’s functions

and fulfillment of the agency’s mission.

Following two separate comment period, if OMB approves this request, the EEOC will notify

employers and provide further instructions.

IV. U.S. Citizenship and Immigration Services

A. H-1B Registration Fee

The U.S. Department of Homeland Security (DHS) plans to charge employers a $10

registration fee—per H-1B candidate—to participate in its mandatory electronic H-1B

registration system. The new fee will apply to all H-1B applications submitted for selection in

the annual lottery, including those eligible for the advanced degree exemption.

According to a proposed rule published in the Federal Register, DHS aims to have the

registration fee requirement finalized before it rolls out the new electronic registration process,

which could be in place for the fiscal year (FY) 2021 cap season, which begins on April 1, 2020.

Given the short amount of time between now and the beginning of FY 2021 cap season, the

agency has shortened the notice-and-comment period from the standard 60 days to only 30 days,

giving the public until October 4, 2019, to submit comments about the proposed registration fee.

B. ICE Begins STEM OPT Worksite Inspections

There have been an increasing number of reports that Immigration and Customs

Enforcement (ICE) has begun conducting workplace site visits for F-1 students employed

pursuant to optional practical training (OPT) in the science, technology, engineering, and math

(STEM) fields. While ICE has had the authority to conduct on-site inspections since 2016, it has

not exercised that authority until recently. Given this new development, companies that employ

STEM OPT workers are encouraged to be prepared in case ICE visits their workplaces.

What to Expect

Any employer that hires an F-1 student pursuant to STEM OPT is subject to a site

inspection. The purpose of such a visit is to verify that the employer is complying with the

STEM OPT regulations and to ensure adherence to the obligations contained in the employee’s

Form I-983 training plan.

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In most cases, ICE will provide 48 hours’ written notice before appearing for a STEM

OPT inspection, though ICE may show up unannounced if it is responding to a complaint or has

evidence to suggest that the company is not complying with the STEM OPT regulations. The

inspection notice will typically include the date of the intended site visit, the name(s) of the

STEM OPT employee(s) selected for the site visit, and a request that personnel who can answer

questions about the company be present.

The notice may also include requests for documentation or information, including but not

limited to:

a copy of the relevant Form I-983 training plan(s);

the number of F-1 students the company employs;

the names of the F-1 students that the company employs;

the total number of employees; and

the company’s E-Verify number.

In some cases, the company may be asked to provide the requested documentation prior

to the visit.

Once on site, the ICE officer(s) will often request to review and discuss the training plan

with the manager responsible for training the STEM OPT employee. The officer(s) will likely

ask about the employee’s duties, qualifications, hours, and compensation. More specifically,

employers may be asked to discuss the following:

The employee’s training plan and role within the company

The relationship between the employee’s role within the company and the employee’s

degree program

The employee’s qualification to perform his or her role within the company

The manager’s role in supervising and training the employee

The officer(s) may also ask to speak to the STEM OPT employee (although that is not

always the case) to confirm the employee’s duties, qualifications, hours, and

compensation. In addition, the officer may ask the employee if he or she has complied

with the STEM OPT reporting requirements, which require STEM OPT students to

report any material changes made to their training plans, employer noncompliance

issues, or changes of employer to their designated student officers.

The duration of the visit can vary depending on the number of STEM OPT employees

included in the visit, but generally lasts for about an hour. The officer(s) may follow up with the

employer after the site visit if additional information is needed.

How to Prepare

Preparation and training are the keys to maintaining compliance and mitigating any

disruption that may be caused by a workplace visit. The considerations below may be applicable

to a wide variety of worksite investigations, and thus a little bit of training can go a long way. An

employer may want to consider the following:

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Identifying a representative from the company (such as the primary immigration point

person) whom reception or security personnel should contact upon the officer’s

arrival;

Training the reception or security staff to inspect the officer’s identification, request a

business card, or write down the officer’s name and contact information;

Designating a company representative to accompany the officer during the visit

(though that person may not be allowed to attend individual interviews);

Informing the company representative that legal counsel may be present during the

visit (either in person or via phone);

Training the company representative to take thorough notes during the visit, including

what documents were provided, who was interviewed, and what questions were

asked, etc.

Ogletree Deakins’ Immigration Practice Group will continue to monitor developments with

respect to STEM OPT worksite investigations and will post updates on the Immigration blog as

additional information becomes available.

C. H-4 EAD

Implementation of the rule rescinding H-4 work authorization has been delayed yet again.

According to DHS, the proposed rule is not expected to be published in the Federal Register

until spring 2020 at the earliest, but even that timeframe may be aspirational. DHS provided an

updated timeline in a letter submitted to the U.S. Court of Appeals for the District of Columbia

in the case of Save Jobs USA v. DHS.

DHS originally considered rescinding the H-4 work authorization program in response to

President Donald Trump’s 2017 Buy American and Hire American executive order. In February

2019, DHS submitted its proposed rule for review to the OMB, where it remains pending.

There have been no changes to the H-4 work authorization program. Under the current

rules, eligible H-4 spouses can continue to apply for initial work authorization documents or

renewals. Renewals can be filed up to six months before the expiration of the employment

authorization document.

D. Per Country Cap Bill

On July 10, 2019, the U.S. House of Representatives passed H.R. 1044, the Fairness for

High-Skilled Immigrants Act of 2019, by a vote of 365 to 65. The bill is intended to reduce

lengthy immigrant visa (green card) wait times by eliminating per-country caps for employment-

based green cards. In addition, senators have reportedly reached an agreement on a version of a

companion bill (S. 386) in the U.S. Senate that presently includes an amendment imposing

tighter restrictions on recruitment and creating new reporting requirements for H-1B visa

sponsors. The following is a summary of the key changes proposed by the House bill:

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Immigrant Visa Process

Elimination of per-country caps for employment-based visas. This is significant because

under the Immigration and Nationality Act, employment-based green cards are currently

limited to 140,000 per fiscal year. From that number, only 7 percent, or 9,800 visas, can

be awarded to foreign nationals from any one country regardless of the size of the

country or the demand. Under the proposed bill, immigrant visas would be issued on a

first-come, first-served basis, regardless of nationality. While the elimination of the cap is

intended to reduce wait times for individuals from countries with the highest volume of

green card recipients, it may result in an increase in the waiting period for other foreign

nationals.

Transition period for EB-2 and EB-3 visa categories. The bill proposes a three-year

transition period during which a certain percentage of EB-2 and EB-3 visas would be

reserved for applicants from countries other than the two largest recipients for that visa

category (currently India and China). For FY 2020, 15 percent would be reserved. In FY

2021 and 2022, the percentage of reserved visas would shrink to 10 percent. Additionally,

no more than 85 percent of the unreserved visas may be awarded to any one country.

In addition to mirroring the elimination of the per-country caps for employment-based

visas, the Senate bill includes an amendment that would affect the H-1B process. The following

is an overview of such proposed changes:

H-1B Process

DOL posting requirement. Employers would be required to post information about the

jobs being offered to H-1B candidates on the DOL’s website for at least 30 days prior to

filing a labor condition application (LCA). The public posting would require each job’s

description, occupational classification, minimum qualifications, salary, benefits, work

location, and application process.

Restrictions on recruitment efforts. An employer would not be able to include language in

recruitment ads suggesting that a position is available only to H-1B workers or that the

employer prefers or would prioritize H-1B workers. The employer would be prohibited

from primarily recruiting individuals for the role who would be H-1B workers.

Expanded review of LCAs by the DOL. The proposed legislation would expand the

DOL’s review of LCAs from merely looking to ensure completeness or spot obvious

inaccuracies to looking for evidence of fraud or misrepresentations of material fact.

Information sharing. U.S. Citizenship and Immigration Services (USCIS) would be

required to notify the DOL if it uncovers information in an H-1B petition that suggests

that an employer is not complying with the H-1B program’s requirements.

Expanded DOL compliance audits. The bill would mandate an annual compliance audit

for employers with more than 100 full-time employees if more than 15 percent of the

employees are in H-1B status. In addition, the DOL would have the authority to audit any

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employer that employs H-1B workers, regardless of whether the employer met the 100-

employee or 15 percent threshold.

Protections for whistleblowers. The bill would provide protections for whistleblowers

who disclose information or cooperate in any investigation regarding a potential violation

of an H-1B requirement.

Elimination of B-1 in lieu of H-1B. Employers would no longer have the option of

bringing employees to the United States in B-1 business visitor status to work on a short-

term basis.

As the legislation evolves in the Senate, further changes may occur. In addition, it is not clear

when, or if, the Senate bill will be put up for a vote, though recent movement on the bill indicates

that a vote may take place in the near future.

James J. Plunke�Senior Government Relations Counsel  ||  Washington D.C.

Jim Plunke� is a Senior Government Relations Counsel in the

Washington, D.C. o�ce of Ogletree Deakins. Jim was previously the

Director for Labor Law Policy at the U.S. Chamber of Commerce where

he focused on legislation, regulations, and policy decisions that impact

the workplace.  �is included activi� concerning the National Labor

Relations Board, the Department of Labor, the Equal Employment

Opportuni� Commission, as well as international labor issues.

Prior to joining the Chamber, Jim was an associate at a national law firm

where he advised employers concerning their legal obligations arising

under federal laws such as the National Labor Relations Act, the Fair

Labor Standards Act, Title VII of the Civil Rights Act of ����, the Age

Discrimination in Employment Act and the Worker Adjustment

Retraining Notification Act.  Jim also assisted in conducting collective

bargaining negotiations and dra�ing employee handbooks on behalf of

clients.

Jim was also a Sta� A�orney at the National Right to Work Legal

Defense Foundation (NRTW) where he advised clients concerning

violations of their rights due to compulsory unionism arrangements.  At

NRTW, Jim represented his clients before federal courts, the NLRB, and

various local public sector employment agencies.

Jim is a graduate of Boston College Law School in Newton,

Massachuse�s and James Madison Universi� in Harrisonburg,

Virginia.