Some Surprises in DOL’s Just Issued Spring 2014 Regulatory Agenda

by Ogletree, Deakins, Nash, Smoak & Stewart, P.C.
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On Friday, May 23, 2014, the White House, through its executive branch and other federal agencies, issued the Spring 2014 edition of the Semiannual Regulatory Agenda. Published twice a year, the agencies’ regulatory agendas provide an outlook on regulatory activity. They show the status of proposed rules and highlight which proposed and final rules are imminent. These regulatory plans also offer additional details about the most significant actions the agencies intend to take in the coming year and identify agency priorities.

On the same day that regulatory agendas were released, President Obama announced his nomination of Shaun Donovan, the outgoing Secretary for Housing and Urban Development, to serve as director of the Office of Management and Budget (OMB). OMB oversees the implementation of the federal government’s regulatory policies by approving all agency rules before they are published as final, and can have a significant effect on rulemaking by expediting or delaying proposed rules.

The Spring 2014 Regulatory Agenda incorporates plans for the executive departments and various federal agencies, including the U.S. Department of Labor (DOL) as well as that of executive agencies such as the U.S. Equal Employment Opportunity Commission (EEOC) and independent agencies such as the National Labor Relations Board (NLRB). The following summary highlights the status of several of the key regulatory measures that the DOL, EEOC, and NLRB consider priorities for 2014 and beyond at the pre-proposal, proposed, and final rulemaking stages.

U.S. Department of Labor

The DOL’s Plan/Prevent/Protect (PPP) initiative, first articulated in its spring 2010 regulatory agenda, is an overall regulatory enforcement strategy designed to shift the burden of ensuring compliance with employment laws administered by the DOL from the Department’s enforcement personnel to employers and other regulated entities themselves—before DOL enforcement personnel ever inspect their workplaces. PPP consists of separate regulatory proposals. Surprisingly, although it was once a priority, the DOL’s Spring 2014 Regulatory Agenda now lists several of the more controversial proposals implementing PPP as “long-term actions” with no target release dates.

Instead, the DOL will focus more immediately on the following proposed regulations:

Wage and Hour Division

Within the DOL’s rule list of 91 items, the Wage and Hour Division (WHD) has five regulatory items. Two of the items are long-term actions for which the WHD did not specify a projected date of when it may issue a proposed rule.  These items are the “Right to Know” rule under the Fair Labor Standards Act (FLSA) initiative and the Fair Labor Standards Act, Child Labor Hazardous Occupations Order, No. 7. As for the active items that WHD is pursuing, these include proposals on the Family and Medical Leave Act of 1993, as amended, establishing a minimum wage for contractors, Executive Order 13658, and defining and delimiting the exemptions for executive, administrative, professional, outside sales and computer employees.

For the first time since President Obama issued a memorandum in March 2014 instructing the DOL to revise its rules to “define and delimit” the FLSA overtime exemptions for “white collar” executive, administrative, professional, outside sales, and computer employees under the Part 541 regulations, the DOL has disclosed its plans to promulgate revisions by November 2014. This probably can be construed as meaning that the WHD will wait until after the November 2014, elections to publish a proposed rule for notice and comment.  At a minimum, it can be said that the DOL is heeding the president’s March 2014 memorandum. The proposed rule is intended to streamline the “white-collar” overtime exemption by increasing the salary level and revising specific job duties required to qualify for exemption. Of course, the notice of proposed rulemaking (NPRM) is merely the start of the rulemaking process, which will also include a period of public comment, agency review, and OMB review prior to final action.

The Spring 2014 Regulatory Agenda also announced that implementing regulations are imminent for President Obama’s Executive Order, issued in February 2014, raising the minimum wage for certain federal contractors. The WHD submitted its proposed rules on the minimum wage for contractors, Executive Order 13658, to the Office of Information and Regulatory Affairs (OIRA) of the OMB. The WHD will need to complete this rulemaking as quickly as possible for two reasons: (1) to meet the October 1, 2014, deadline of the Executive Order; (2) to allow the DOL and the WHD to dedicate all available resources to the regulatory agenda item to revise Part 541 regulations.

The Wage and Hour Division (WHD) is also set to release regulations revising the definition of “spouse” under the Family and Medical Leave Act (FMLA) in light of the U.S. Supreme Court’s decision in United States v. Windsor. According to the agenda, this proposed rule is imminent.

Notably, these regulations, and in particular the Part 541 regulations, appear to have superseded the WHD’s “Right to Know” initiative to update FLSA recordkeeping regulations “to enhance the transparency and disclosure to workers of their status,” and the basis for that status, as exempt employees, non-exempt employees, or independent contractors. The Right to Know regulation has been classified as a “long term action” with no target release date. It may be premature to declare the Right to Know item as kaput, but it seems to be headed in that direction. Notwithstanding Right to Know’s “long term” status, OMB’s Office of Information and Regulatory Affairs (OIRA) concluded its review of the worker classification survey which WHD had initiated last year to help justify its Right to Know initiative. Thus, DOL may initiate the worker classification survey to support the charge of Secretary of Labor Thomas Perez and David Weil, the new WHD administrator, to prevent, detect, and remedy employee misclassification.

Occupational Safety and Health Administration

The Occupational Safety and Health Administration (OSHA) has long considered as a priority a rule promulgating an Injury and Illness Prevention Program (I2P2). According to the most recent regulatory agenda, OSHA had planned to issue a proposed rule by September 2014 requiring employers to implement an I2P2. The program would involve both employers and their employees in developing, implementing, and evaluating workplace plans for improving processes and activities that would identify worker safety and health hazards, even when OSHA does not have a current standard covering the hazard. However, OSHA’s just-released Spring 2014 Regulatory Agenda now puts this rulemaking priority on hold as a “long-term action” with no release date. Again, this is somewhat surprising given the priority OSHA Administrator David Michaels assigned to it as integral to the enforcement process.

Other OSHA Rules

OSHA again dominates the DOL’s rulemaking agenda with a total of 26 measures at various points in the rulemaking process. One of those proposals—OSHA’s proposed plan to add a musculoskeletal disorders (MSD) column to OSHA’s Form 300 injury and illness log—has been assigned to the regulatory back burner. This is significant because the requirement was considered a precursor to an ergonomics standard.

However, proposed standards governing combustible dust and infectious diseases are still at the pre-rule stage. With the comment period now closed, OSHA has listed its proposed standard. The date listed for the record to close on post-hearing comments for the controversial crystalline Silica standard, which is in its final stages, is July 2014. There is no date listed for a final rule. A final rule to “improve tracking of workplace injuries and illnesses” by requiring employers to submit injury and illness data electronically to OSHA is still scheduled for publication by March 2015. The proposal is particularly controversial because OSHA will make the information regarding injuries and illnesses at particular facilities publicly available. OSHA also expects to finalize amended standards governing fall protection that will likely have a significant impact on the operations of many different types of facilities.

Since OSHA is the agency charged with enforcing the whistleblower provisions in 22 separate statutes, final or interim final rules for handling retaliation complaints under the following statutes are all scheduled to be released by February 2015: the Affordable Care Act (ACA), Moving Ahead for Progress in the 21st Century Act (MAP-21), the Corporate and Criminal Fraud Accountability Act of 2002, the Consumer Protection Act, the Seaman’s Protection Act, the FDA Food Safety Modernization Act, the National Transit Systems Security Act, the Surface Transportation Assistance Act, and the Federal Railroad Safety Act.

The Office of Labor Management Standards

Notably, the DOL’s Office of Labor-Management Standards (OLMS) has once again postponed the release of its highly controversial “persuader activity” rule until December 2014 and perhaps beyond. The rule would significantly broaden the scope of publicly reportable activities by substantially narrowing the DOL’s interpretation of the “advice exemption” in section 203(c) of the Labor-Management Reporting and Disclosure Act (LMRDA).

This final rule would greatly expand the types of services involving counseling employers about union activities (such as organizing, collective bargaining, strikes, and other forms of concerted activities) that would trigger employer- and outside labor relations consultant-reporting requirements. The rule could have a drastic impact on the confidential nature of the attorney/client relationship by narrowing what constitutes legal advice that is exempt from section 203’s reporting requirement. Moreover, many small employers without in-house counsel to assist with legal advice during union organizing campaigns and with the filing of the LMRDA’s reporting requirements would be placed at a disadvantage in communicating lawfully with their employees. This is especially true if the proposed persuader rule is combined with the NLRB’s proposed revisions to its union representation election rules—the so-called “quickie” or “ambush” election rules. While the further delay of the persuader rule is welcomed by opponents of the rule, it is now listed for final promulgation in December 2014.

Consultant Form LM-21 Receipts and Disbursements Report

Related to the persuader rule, OLMS intends to issue a proposed rule by December 2014 that would require employers to electronically file the Form LM-21, Receipts and Disbursements Report, which is required under section 203(b) of the LMRDA. The OLMS rule may otherwise define “labor relations advice and services”—even those unrelated to “persuader activities”—as matters that must be reported for all clients, whenever the consultant or law firm provides any “persuader activity” service for one client.

The Office of Federal Contract Compliance Programs

The Office of Federal Contract Compliance Programs (OFCCP) plans to issue two proposed rules regarding federal contractors’ compensation practices. These rules respond to President Obama’s memorandum directing the U. S. Secretary of Labor to propose a rule requiring federal contractors to submit summary compensation data to the DOL  and to Executive Order 13665 prohibiting retaliation against employees and applicants who discuss compensation information, both of which were issued last month. The pay data collection tool will require contractors to report employee compensation data, including data by race and sex, annually. The executive order, the presidential memorandum, and the new rules are designed to further the Obama administration’s emphasis on pay equity and wage transparency.

According to the DOL’s Spring 2014 Regulatory Agenda, OFCCP intends to issue an NPRM for compensation data collection in August 2014. In addition, the agency is scheduled to issue an NPRM for Executive Order 13665 in September 2014. OFCCP has also targeted September 2014 to propose new sex discrimination guidelines that reflect the agency’s view of the current state of the law in this area. The current guidance in 41 CFR Part 60-20 is more than 30 years old and, according to OFCCP, “warrants a regulatory lookback.”

In addition, OFCCP still intends to replace current regulations implementing the affirmative action obligations of construction contractors with new regulations that, in the agency’s view, “reflect the realities of the labor market and employment practices in the construction industry today.” The proposed regulations, last revised in 1980, are now targeted for January 2015.

Employee Benefits Security Administration

The Employee Benefits Security Administration (EBSA) has a number of significant issues on its regulatory agenda for 2014.  In particular, EBSA has indicated its intention to continue to pursue greater transparency for retirement plan investment fees and costs via refinements to existing ERISA disclosure regulations, including through enhanced disclosure requirements for so-called “target date” funds.  EBSA has also signaled its interest in the fiduciary implications of self-directed investment or “window” accounts and expects to conduct information-gathering during 2014 with an eye towards further regulatory activity in 2015.

However, the single most significant item on EBSA’s agenda involves its proposed expansion of the activities that can lead to fiduciary status under ERISA. This proposal has had a fairly tortured history within the agency and has been under consideration for several years in the face of continuing bipartisan criticism from Congress and private industry. EBSA’s agenda tentatively indicates that the revised regulations will be re-proposed in August 2014, but Congressional pressure may ultimately delay issuance of the regulations until after the November 2014 elections. Even in a scaled-back form, these regulations are likely to have a broad impact on advisers providing investment advice and education to retirement plan sponsors and plan participants.

U.S. Equal Employment Opportunity Commission

According to its submissions to the Spring 2014 regulatory agenda, the EEOC had nine items on its list of initiatives, with the only new one concerning wellness programs offered through employer health plans. The EEOC’s new action item for the year is to issue a proposed rule on how incentives to employees given as part of employer wellness plans should be treated under the Americans with Disabilities Act (ADA) and the Genetic Information Nondiscrimination Act (GINA). The EEOC plans to amend existing ADA rules to address whether, and to what extent, the ADA permits employers through their health plans to financially penalize or incentivize employee conduct as part of wellness programs.

The EEOC also plans to amend GINA regulations to “resolve the frequently-asked question of whether employers may offer inducements to employees’ spouses or other family members who answer questions about their current medical conditions” on health risk assessments, which are sometimes included in wellness programs.

National Labor Relations Board

As expected, the National Labor Relations Board (NLRB) reissued its controversial NPRM revising its representation election rules and procedures (commonly referred to as the “ambush election” rules), after having been rebuffed by the U.S. Court of Appeals for the District of Columbia Circuit on procedural grounds. The reissued rules are virtually identical to the rules originally proposed in 2011, even though following the more-than-65,000 comments filed during the 2011 NPRM, the agency had scaled back the final rule and revised or deleted several of the more controversial provisions. The current NPRM was issued in February 2014; the comment and hearing process closed in April, so the rule is now in the hands of the NLRB for final action, which is expected before December when the term expires for Board Member Nancy Schiffer, thus possibly averting a 2-2 deadlock on the rules.

Conclusion

While many of these and other agency rules listed in the federal government’s Spring 2014 Regulatory Agenda are aspirational, and often end up being delayed, they are significant because they provide insight into the agency’s regulatory priorities. They also identify when employers may provide the agency with public comment or other input before the rules become final, when these rules will be issued as final, and when they may be addressed by Congress and the courts.

 

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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