Consistent with his stated intention to use his Executive powers when he and Congress cannot agree on new legislation, President Obama has recently announced many new initiatives to affect the workplace. As we advised you in last Fall's newsletter, new regulations from the Office of Federal Contract Compliance Programs ("OFCCP") went into effect last month requiring contractors to set goals and timetable for the hiring of the disabled and veterans.

Other new directives have come from the:

  • Equal Employment Opportunity Commission ("EEOC") regarding the use of conviction records in hiring decisions and discrimination against the unemployed,
  • Occupational Safety and Health Administration ("OSHA") regarding the real-time reporting of workplace injuries (as described in our last newsletter) and
  • National Labor Relations Board ("NLRB") regarding speeding up union representation elections and the regulation of employers' policies concerning social media.

With respect to the NLRB, you may recall that its attempt to require the posting of a notice informing employees of their rights under federal labor laws failed after court challenges. Other initiatives of the Board taken in the last few years are in legal peril due to its failure to have a quorum of members confirmed by the Senate – an issue to be decided in the Noel Canning case now before the Supreme Court. But since the Senate changed its' rules to eliminate the filibuster on Presidential nominees, all of President Obama's selections have been confirmed and the Board is going forward with new rules more favorable to union organizing.

Proposed Changes to Wage and Hour Laws

Now, in this new year, the President has urged more new actions. In order to raise the pay of lowly paid workers across the United States, on February 12, 2014, he issued an Executive Order requiring that all new contracts beginning on January 1, 2015 between the federal government and contractors contain a clause mandating the contractor to pay a minimum wage of $ 10.10 per hour. The President has also proposed amendments to the Fair Labor Standards Act of 1938 ("FLSA"), 29 U.S.C. § 201 et seq. to raise the minimum wage applicable to all federal workers, but that effort does not seem likely to be enacted by this Congress.

However, in an area the President can affect without Congressional approval, he has, on March 13, 2014, directed the Secretary of Labor, Thomas Perez, to change federal regulations now governing overtime pay to millions of American workers. Currently, under the regulations implemented by the Secretary's Wage and Hour Division, employees who are engaged in executive, administrative and professional positions are exempt from the requirement that they be paid time and a half their regular rates of pay after 40 hours of work in any work week. Among the current regulations' requirements for the establishment of such positions is a condition that the employee receive at least $455 per week (or $23,660.00 per year). Advocates for changes to the regulations contend that this threshold has failed to keep up with inflation and has left millions of low-paid salaried workers without the basic protections meant by the FLSA. The last time the regulations were increased was in 2004 when the basic salary requirement was raised from $230 per week to $455 per week under President Bush.

In addition, the President directed Secretary Perez to consider revising the substantive test for the executive exemption, i.e. whether an employee's "primary duty" consists of supervision. Currently, the test is based upon subjective factors regarding an employee's working duties, regardless of the amount of time spent in managerial, as opposed to ordinary, working tasks. Proponents of the new rules contend that many "working supervisors" should in fact be treated as regular employees entitled to overtime pay.

These changes, when final, will affect every workplace in the United States wherein supervisors receive relatively low pay. Due to the requirements under federal law with respect to regulatory changes, wherein proposed changes are subject to a public comment period, it is not expected that any changes will become final until the passage of at least twelve to eighteen months.

Pay Equity

Recently, the President has asserted that women are paid only 77% of what men are paid in the U.S. workforce. This figure has been widely disputed as a gross exaggeration with many economists asserting that non-discriminatory factors, such as education, career choices and maternity, explain the discrepancy. Nevertheless, on April 8, the President issued two more Executive Orders designed to increase pay equity in the workforce. The first order prohibits federal contractors from retaliating against employees who share salary information between themselves. Again, this Order falls on the heels of the failure of Congress to pass the "Paycheck Fairness Act" which would prohibit such retaliation by all employers. The second Oder directs Secretary Perez to develop regulations requiring contractors to report their salary practices to the Department of Labor on a yearly basis so the department can determine whether wage discrimination is occurring.

We will keep you advised of all of these developments as the regulatory process goes forward.

 

Related News