Week in Review

May 12, 2015

Proposed white-collar exemption revisions advance to OMB review
The Department of Labor has submitted its proposed white-collar exemption rule to the Office of Management and Budget for review. The DOL has reviewed and made proposed revisions to the FLSA regulations that govern overtime pay eligibility at the direction of President Obama. In March 2014, the president issued a memo directing the Secretary of Labor to take action to strengthen federal overtime protections-in a manner that presumably will expand the workforce segments entitled to overtime wages. The White House cited the erosion of overtime protections as an impetus for the directive. In support of the move, a fact sheet noted the DOL's authority to define through regulation exceptions to the minimum wage and overtime rules set by the FLSA. Both the fact sheet and the memorandum pointed specifically to the commonly used "executive, administrative and professional" employees, the so-called "white collar" exemption. The revisions to the regulation are unknown at this time and will not be publicly available until the OMB completes its review and the DOL releases the proposed regulation for public comment. While there is no minimum time period, the OMB's Office of Information and Regulatory Affairs may take up to 90 days to review a proposed regulation, with a one-time extension of not more than 30 days.

NY Wage Board to consider minimum wage in the fast food industr
y
New York State Governor Andrew M. Cuomo on May 7, 2015, instructed the State Labor Commissioner to empanel a Wage Board that will investigate and make recommendations on an increase in the minimum wage in the fast food industry. The Wage Board will take approximately three months to examine the issue and make recommendations regarding a possible increase. Those recommendations are expected by July, and do not require legislative approval in order to become enacted. Under New York State law, a Wage Board can suggest changes to the minimum wage in a specific industry or job classification if it finds that wages are insufficient to provide for the life and health of workers within that industry or classification. Despite being a well-established and thriving multi-billion dollar industry, the fast food sector employs tens of thousands of minimum wage workers in New York State-the vast majority of which are women, and recipients of welfare or other forms of public assistance. The State Assembly passed legislation on May 4th to raise the state minimum wage first to $10.50 per hour on December 31, 2016, then to $11.55 on December 31, 2017, and finally to $12.60 per hour on December 31, 2018.

New Jersey company sued over alleged failure to reemploy National Guard member
The Department of Justice has filed a lawsuit against a New Jersey company asserting that the company willfully violated the Uniformed Services Employment and Reemployment Rights Act of 1994 (USERRA) when it failed to reemploy a former employee when she returned from a National Guard deployment. The 32-year-old former employee joined the U.S. Army National Guard in September 2004 and, most recently, had served as a sergeant, with honorable service as a mental health specialist. When she returned from her military deployment in May 2014, the DOJ asserts that the company willfully violated USERRA by not reemploying her as a mental health screener or in another comparable position. "No person should lose their job for serving our country, but according to our complaint that's exactly what happened to a National Guard member here," said Acting Associate General Stuart F. Delery. "Today's filing is one more example of the Department of Justice's commitment to protecting the men and women who serve in our Armed Forces from discrimination and unlawful actions." The case was referred to the DOJ following an investigation by the DOL's Veterans' Employment and Training Service.

Victory for Employers in Mach Mining v. EEOC
On April 29, 2015, the U.S. Supreme Court issued its long-awaited decision in Mach Mining, LLC v. EEOC, No. 13-1019 (U.S. 2015). In a unanimous opinion authored by Justice Kagan, federal courts will have the authority to review the EEOC's conciliation efforts. In language that is sure to be repeated back to the EEOC for years to come, the Supreme Court held that "absent such review, the Commission's compliance with the law would rest in the Commission's hands alone." The Supreme Court said this would be contrary to "the Court's strong presumption in favor of judicial review of administrative action." While the Supreme Court did not rule that the intensive review that Mach Mining argued for was required, the case nevertheless represents a significant win for employers and resounding defeat for the EEOC. The EEOC will no longer be able to file suit against employers after paying mere lip-service to its conciliation efforts, and to give them the back of the hand in response to requests for fulsome information about liability and exposure in a threatened lawsuit. As a result employers will be in a better position to settle meritorious claims on reasonable terms before the EEOC files suit, thus saving employers from unnecessary litigation expense.

More small employers consider self-funding
The ACA is at the forefront of many employers' minds and there's a lot of discussion about self-funded health plans. Recently, a new group of employers are joining the conversation. In the past only employers with 100 to 150 employees would seriously consider self-funding. Now, those with 50 to 100 workers are also considering self-funding as an option. Even non-profit organizations are considering it as a viable alternative to the traditional fully insured model. Historically, non-profits haven't wanted to risk a bad claim year, as they are focused on providing as much money and resources as possible to their mission, but that's changing. Having access to detailed claims reports is a main reason most employers with 50 or more employees are looking at self-funding. Annual rate increases under fully insured plans, which offer limited reporting, leave employers in the dark about whether or not those increases are warrantied which frustrates employers. This is one of many items under consideration as employers of all sizes consider their benefit plan options as costs continue to rise. We fully expect more "outside the box" thinking as the ACA provisions become fully implemented for the 50-100 employee size groups in 2016.