What’s on the Regulatory Horizon Part Two: Wage and Hour Division Tips Its Hand

In the first part of this series, we examined the three major strategies in the U.S. Department of Labor’s (DOL) regulatory agenda. In part two of this two-part series, we will look at one regulatory topic of great interest.

The “Right to Know” Proposal

The DOL’s Wage and Hour Division (WHD) has yet to offer the “Right to Know” proposal, other than to generally describe it. This regulatory item is listed among the 14 items that the DOL describes as awaiting “Long-Term Actions.” The WHD has described the right-to-know item as a rewrite of the recordkeeping regulations found in Part 516 of Title 29 of the Code of Federal Regulations.

The WHD characterizes right to know as an action that will protect employees and will promote transparency because it envisions the proposal as requiring employers to disclose to its workers their status either as employees or independent contractors. If a worker is classified as an employee, then the employer would have to inform the employee about how his or her pay is computed. Other information from the WHD about this long-term item has indicated that the agency also may include requirements that employers conduct a classification analysis of employees that are viewed as exempt under the FLSA and provide a copy of the analysis to the exempt employee. Other than characterizing the right-to-know item as long-term, the WHD provided no other information as to when it may propose a right-to-know regulation.

However, the WHD may have tipped its hand about the status of a right-to-know proposal in January of this year when it published a notice of a proposed information collection request (ICR) announcing its intent to conduct a worker classification survey. In this notice, the WHD has requested comments on the various documents and questionnaires, including a worker survey on compensation, which it intends to use. The public comment period ends on March 12, 2013. The WHD stated that this survey “will gather information about workers’ employment and pay arrangements and will measure workers’ knowledge about their current job classification, and their knowledge about the rights and benefits associated with their job status.”

WHD’s Request for Comments

Specifically, the WHD has requested comments to address the following aspects of its proposed notices: (1) whether the collection information is necessary and will be useful to the WHD in discharging its statutory responsibilities; (2) whether its estimates of the burden associated with the proposed collection of information are accurate, including the validity of the assumptions and methodology that the WHD has used in designing the information collection tools; (3) whether there are ways to improve the clarity, quality, or utility of information that the WHD proposes to collect; and (4) whether there are ways to minimize the information collection burden, such as through the use of technology or other automated or electronic means. To view the notice, click here.

One inescapable conclusion that can be drawn from these two regulatory developments is that the WHD wants to proceed with its right-to-know proposal—but first it is compelled to build a case for such a far-reaching regulatory proposal. The information that it hopes to elicit through the worker classification survey may indicate that workers are not aware of their job classification and lack information about the significance of their classification in terms of the benefits and rights of their classification. According to the WHD’s strategy, this employee lack of knowledge and information will lead to the conclusion that workers are ill-equipped to handle and understand the consequences of their misclassification and that it is the WHD’s responsibility to educate and protect employees by issuing a right-to-know regulation, which would require employers to disclose certain classification information to their workers. In addition, the WHD will justify a right-to-know proposal by eliminating labor advantages that employers which misclassify workers enjoy over their competition. While this worker classification survey is expected to take approximately 30 months, there is ample time for the current Administration to justify and issue a right-to-know regulation notwithstanding the significant fiscal impact that such a rule will have.

We encourage interested employers and trade associations to submit comments to the WHD on its proposed survey by March 12, 2013.


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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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