Members of Congress left Washington D.C. last week for a five-week August recess. Many employment related bills have languished this session as Congress has focused on trade, confirming nominees, and passing a two-year budget deal, which suspends the debt ceiling through mid-2021.
Even though members of Congress are back home, the regulatory agencies remain open, which reminds us that even when Congress is on recess, the employment-related landscape of HR is ever-changing. Below are a few key areas we are actively monitoring as we move into the fall of 2019:
Department of Labor News
- We will be watching closely how the U.S. Senate addresses the pending nominee for Secretary of Labor, Eugene Scalia, and the impact he will have on the Department of Labor’s (DOL) major regulatory initiatives including changes to the proposed overtime rule, changes to the regular rate calculation for overtime pay, and changes to joint employment regulations. The Trump Administration would like to finalize these proposals before the next election. However, we do not see significant movement where members will need to take specific action on these initiatives in 2019.
- On July 22, 2019, the DOL issued a new opinion letter that addresses compliance issues related to the Fair Labor Standards Act (FLSA). An opinion letter is an official, written opinion by the Department's Wage and Hour Division (WHD) on how a particular law applies in specific circumstances presented by the individual person or entity that requested the letter. Specifically, the opinion addresses the compensability of time spent in a truck's sleeper berth while otherwise relieved from duty. Significantly, this opinion letter provides new guidance. Under prior guidance, WHD interpreted the relevant regulations to mean that while sleeping time may be excluded from hours worked where "adequate facilities" were furnished, only up to 8 hours of sleeping time may be excluded in a trip 24 hours or longer, and no sleeping time may be excluded for trips under 24 hours. WHD has concluded that this interpretation is unnecessarily burdensome for employers and now “under which the time drivers are relieved of all duties and permitted to sleep in a sleeper berth is presumptively non-working time that is not compensable.”
- On July 29, 2019 the DOL finalized a rule which would allow small businesses to band together to offer retirement plans to their employees through Association Retirement Plans (ARPs) sponsored by a larger association, such as a local Chamber of Commerce or a Professional Employer Organizations (PEO). A PEO is a human-resource company that contractually assumes certain employment responsibilities for its client employers. ARPs could also be offered by associations of employers in a city, county, state, or a multi-state metropolitan area, or in a particular industry nationwide. As we previously reported, under the rule, in theory, it will enable businesses to offer retirement plans comparable to larger corporations. The final rule effective date is September 30, 2019.
Some Employment Bills Have Passed House
It’s a nice first step, but these bills face a much less certain future in the Senate:
- The Raise the Wage Act passed the House on July 18, 2019. The bill, if passed, will raise the federal minimum wage to $15 an hour by 2025 (currently at $7.25 an hour and has not been raised since 2009). The bill has virtually no hope in the Senate as Majority Leader Mitch McConnell (R-Ky.) has already signaled its dead-on arrival. However, as we have seen in the recent Presidential debates, this issue is a major political talking point, and will likely continue to be until the 2020 election.
- On July 17, 2019, the Middle Class Health Benefits Tax Repeal Act of 2019 also passed the House. If passed, the bipartisan bill would repeal the 40 percent excise tax under the ACA known as the "Cadillac tax" on certain high-cost employer-sponsored health care plans. Congress has repeatedly delayed the ACA’s "Cadillac" tax, which is currently set to go into effect in 2022. Although the measure has bipartisan support, it remains to be seen on when it will move forward in the Senate.
- In May, the House passed a retirement bill titled the Setting Every Community Up for Retirement Enhancement Act of 2019. This bill modifies the requirements for employer-provided retirement plans, individual retirement accounts (IRAs), and other tax-favored savings accounts. This bill has bipartisan support although it has stalled in the Senate.
Paid Leave Proposal
Shortly before heading home, the Senate introduced a new paid leave proposal that would allow new parents to take an advance of up to $5,000 on their future child tax credits, which would then be offset in future years. The bill has bipartisan support, and similar legislation has been proposed in the past, but we have seen very little appetite to actually pass employment legislation in both Houses. We are not holding our breath on this one.
On July 22, 2019, the DOL’s Office of Federal Contract Compliance Programs (OFCCP) issued an opinion letter that addresses pay analysis groupings (PAGs), which are groups of comparable employees that are reviewed to determine whether a contractor’s compensation practices are discriminatory. However, the opinion letter does little in providing actual guidance, but instead asks contractors to “submit their PAG structure for review and to receive feedback from OFCCP, which OFCCP would take into account in future compliance evaluations.”
The OFCCP then released three new FAQs as another step in the DOL’s ongoing efforts to enhance the transparency and effectiveness of compliance assistance to help contractors meet their responsibilities for equal employment opportunity.
- The FAQs on validation of tests used by contractors when selecting workers for employment serve as a reminder for contractors to validate selection procedures used in the selection process if they find disparate impact, following the Uniform Guidelines on Employee Selection Procedure.
- The FAQs on the OFCCP's use of "practical significance" during compliance evaluations provide clarity for contractors on understanding how the agency determines where to apply investigative resources.
- The FAQs on how contractors can determine whether to include project-based or freelance workers in their AAPs and employment activity data submitted to OFCCP provide information on how to determine whether a worker doing business on a project or freelance basis is an independent contractor or an employee, and whether they need to be included in AAPs.
On August 2, 2019, The OFCCP released new Compliance Assistance Guides. The new compliance assistance resources included:
- OFCCP At a Glance, which provides an overview of what the Agency does
- Guidelines on what contractors can expect when working with OFCCP
- A Posting and Notices Guide that focuses on posting and notice requirements for federal contractors
- Recordkeeping guides for disability inclusion (Section 503), veterans' employment (VEVRAA), and equal employment opportunity (Executive Order 11246)
Source: Michael Hyatt, Director, HR Government Affairs, MRA - The Management Association, DOL.gov, OFCCP.gov