Federal white collar exemptions: According to the Department of Labor’s (“DOL”) most recent Semiannual Regulatory Agenda, proposed rules revising the regulations implementing the federal Fair Labor Standards Act (“FLSA”) are expected this month. In March 2014, President Obama instructed the Secretary of Labor to modernize and streamline existing overtime regulations for the so-called white collar—executive, administrative, and professional—exemptions. The regulations have been revised only twice in the past 40 years, most recently in 2004 to increase the salary threshold to $455 per week ($23,660 annualized) and remove a minimum timing requirement associated with exempt duties. Two key changes are widely anticipated: (1) an increase in the salary requirement to about $40,000 annually and (2) a shift in focus to the amount of time spent on exempt duties (and away from the position’s primary duty). For California employees, particularly those in the high-tech sector, it is unlikely that such changes would have much, if any, impact on current practices given California’s more stringent approach to exemptions. However, significant changes could be in store for employees outside of California. Any changes to the regulations require compliance with the federal Administrative Procedure Act’s rulemaking process, including notice, public comment and review periods. Thus, even if published in June 2015, it is unlikely the regulations would be effective before 2016.
Use of technology, including smartphones, by employees outside work hours: The DOL’s Wage and Hour Division will be seeking information from the public on how the proliferation of portable electronic devices is impacting workers, including hours worked, tracked, and paid. In the Semiannual Regulatory Agenda, this topic is listed in the “pre-rule” stage with the request for information slated for publication in August 2015. It remains to be seen what, if any, regulatory action may follow.
Federal contractor reporting requirements: Pursuant to Obama’s Fair Pay and Safe Workplaces Executive Order, the DOL issued guidance and the Federal Acquisition Regulatory Council published a revised regulation addressing new reporting requirements for federal contractors. The guidance and the regulation require potential federal contractors whose estimated value of supplies or services exceeds $500,000 to disclose any labor law violations in the prior three years to be considered for a contract. Violations subject to reporting include administrative rulings, civil judgments, and arbitration awards or decisions rendered against the contractor for violations of specified federal employment-related laws and their state equivalents. According to the DOL guidance, “notices or findings—whether final or subject to appeal or further review—issued by an enforcement agency following an investigation” must also be reported. The reporting obligations extend to the potential contractor’s subcontractors, subject to a further $500,000 value threshold and other limited exceptions. After being awarded a contract, the contractor must update its disclosures every six months for the duration of the contract. The requirement poses practical challenges, particularly for companies with large or geographically distributed workforces, of tracking and managing information to ensure compliance. But, the biggest uproar from the industry appears to reflect blacklisting fears—that one contracting officer’s determination may effectively bar future contracts. The comment periods on the regulation and guidance continue through late July 2015.
We will continue to monitor these pending regulatory matters and report on further developments as they arise.
