Department of Labor Sets FLSA Regulation Deadline for November 2014, Final Regulations Unlikely to Arrive Before Spring 2015

by Franczek Radelet P.C.
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US Department of Labor logo.jpgRecently, we told you that President Obama had issued a Presidential Memorandum to the U.S. Department of Labor (DOL) instructing its Secretary to update regulations regarding overtime protection for workers under the Fair Labor Standards Act (FLSA), the federal law that establishes minimum wage and overtime pay requirements. The regulations have not been revised at all since 2004, and we made some predictions last month about what employers could expect and, more importantly, when they could expect it.

Over the holiday weekend, the Obama Administration released its required Semiannual Regulatory Agenda. The Agenda, which is not binding on the DOL, includes several FLSA-related items. Most importantly, the DOL plans to address the “white collar” overtime exemption regulations with proposed rules in November 2014. The section, “Defining and Delimiting the Exemptions for Executive, Administrative, Professional, Outside Sales, and Computer Employees,” appears on page 56 and 57 of the Agenda.

Notably, the “Right to Know Under the Fair Labor Standards Act” continues to appear in the Agenda as a “Long-term Action” item. According to the DOL, this proposed regulation would “enhance the transparency and disclosure to workers of their status as the employer’s employee or some other status such as independent contractor, and if an employee, how their pay is computed.” The DOL did not include a deadline for this significant regulation. In 2010, the DOL announced that it would propose a rule on this same topic in April 2011, but never did so. The Agenda also references long term consideration of changes to child labor regulations.

That being said, any proposed changes to the regulations are subject to the federal Administrative Procedure Act’s rulemaking process, which means the administration would need to complete a number of time-consuming steps before any rule change could take effect. These steps include a required notice of proposed rulemaking and a public comment period. Then, the DOL would need to hear testimony, consider public comments, and have a final version of the revised regulations approved by the Office of Management and Budget’s Office of Information and Regulatory Affairs (OIRA). Typically, the public comment period will extend at least 30 days. After, the DOL drafts a final regulation that responds to any public comments, OIRA would then conduct a final review, approve the text of the regulation, and publish it in the Federal Register. The period for the Office to review a draft regulation is limited by an Executive Order to 90 days, with the possibility of a single, 30-day extension. While there is no minimum period for review, the average review time in past years has been approximately two months. Therefore, even with a short 30-day comment period and a quick turnaround on a final rule, the DOL is unlikely to have any new regulation in place before spring 2015.

To put this in perspective, the 2004 regulations took more than 18 months to implement, and those changes were not viewed as “drastic” as what is anticipated to come from the DOL in its November proposal. Even if the administration can push through the new regulations before the end of President Obama’s term, affected parties are likely to file legal challenges to any revisions, which could potentially delay their implementation further.

 

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Franczek Radelet P.C.
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