AGC's Human Resource and Labor News - August 18, 2015 / Issue No. 04-15 (Print All Articles)

Back to Graphical Version | Search back issues


Proposed Changes to Overtime Regulations Announced; AGC Prepares to Comment

On June 30, the U.S. Department of Labor’s Wage and Hour Division (WHD) published its Notice of Proposed Rulemaking (NPRM) announcing proposed changes to the overtime regulations of the Fair Labor Standards Act.  The proposal is the result of a 2014 directive from President Obama requiring the Secretary of Labor to modernize and streamline the existing overtime regulations.  The NPRM was officially published in the Federal Register on July 6.

On June 30, the U.S. Department of Labor’s Wage and Hour Division (WHD) published its Notice of Proposed Rulemaking (NPRM) announcing proposed changes to the overtime regulations of the Fair Labor Standards Act.  The proposal is the result of a 2014 directive from President Obama requiring the Secretary of Labor to modernize and streamline the existing overtime regulations.  The NPRM was officially published in the Federal Register on July 6. 

If implemented without changes, the proposed rule would increase the salary threshold for the executive, administrative and professional exemptions from $455 per week ($23,660 per year) to $921 per week ($47,892 per year).  The threshold for highly compensated employees would also increase from $100,000 per year to $122,148 per year.  Both thresholds would be adjusted annually based on one of two proposed methods.  Although WHD did not propose any changes to the duties tests in the NPRM, it strongly indicated consideration of changes and requested comments on possible changes. 

In anticipation of the rule’s announcement, AGC has been advocating on behalf of its members by monitoring the rulemaking process and participating in a cross-industry employer coalition specifically devoted to employer advocacy with regard to the rule.  Last year, AGC met with the WHD and the Small Business Administration (SBA) to share the industry’s concerns and will, again, meet with SBA to further share any post-announcement concerns of the industry.  In addition, AGC will soon survey its members to gather feedback on the specific aspects of the proposal to further assess its impact on the construction industry. 

The deadline for public comments on the proposed rule is September 4.  AGC will submit comments as part of the coalition and/or individually.  

For more information, contact Tamika Carter at cartert@agc.org.


DOL Issues Administrator's Interpretation Concluding Most Workers are Employees Under the FLSA

On Wednesday, July 15, the U.S. Department of Labor (DOL) issued an interpretative guidance memo aimed at addressing the misclassification of employees as independent contractors. The DOL's position is that most workers qualify as employees under the Fair Labor Standards Act (FLSA) and its broad definition of "employ."

On Wednesday, July 15, the U.S. Department of Labor (DOL) issued an interpretative guidance memo aimed at addressing the misclassification of employees as independent contractors. The DOL's position is that most workers qualify as employees under the Fair Labor Standards Act (FLSA) and its broad definition of "employ."

Perceived employee misclassification has become a hot topic in recent years as the economy has changed and growing businesses turn increasingly to enlist the help of contract workers. In fact, since announcing its Misclassification Initiative in September 2011, the DOL continues to make employer compliance with the FLSA a top priority. The number of FLSA cases filed in federal courts has significantly increased as a likely result of the DOL activity. Misclassification issues present fertile ground for DOL investigations, individual complaints and class action litigation.

In a 15-page interpretation memo, David Weil, the Wage and Hour Division Administrator for the DOL, highlights the FLSA's broad definition of "employ." The term "employ" is defined in the FLSA, in part, as to "suffer or permit to work." Applying the FLSA's definition, Weil stresses that workers who are economically dependent on the business of the employer, regardless of skill level, are considered employees. On the other hand, independent contractors are workers with economic independence who are in business for themselves. The "suffer or permit" standard is intended to offer the broadest definition of employment under the law because it covers work that the employer directs or allows to take place.

The Administrator focused on the "economic reality" factors developed by the courts which include:

  • the extent to which the work performed is an integral part of the employer's business;
  • the worker's opportunity for profit or loss depending on his or her managerial skill;
  • the extent of the relative investments of the employer and the worker;
  • whether the work performed requires special skills and initiative;
  • the permanency of the relationship; and
  • the degree of control exercised or retained by the employer.

The Administrator stressed that, in today's tech savvy society, work can be integral even if it is performed away from the company's premises, such as at the worker's home, or on the premises of the company's customer. Further, the profit or loss analysis should focus on the worker's ability to develop business beyond a current job. This factor dovetails into the "relative investment of the worker" as that which goes beyond a current job and could expand the worker's business, reduce the worker's cost structure or extend the reach of the worker's business.

The Administrator noted that no one factor is controlling. Rather, when classifying workers, employers should consider each factor in light of the ultimate determination of whether the worker is really in business for him or herself (and thus a true independent contractor) or is economically dependent on the company (and thus is truly an employee).  

The DOL has also stressed that certain factors are immaterial in determining the existence of an employment relationship. For example, the fact that a worker has signed an agreement stating that the worker is an independent contractor is not controlling because the reality of the working relationship - and not the label given to the relationship in an agreement - is determinative.

To avoid liability under the new interpretation of "employ," employers should review any independent contractor relationships they currently use. Employers should next ensure these relationships satisfy the six criteria outlined above. Because of the complexity of this analysis, it is recommended that employers consult with an attorney to help in this evaluation.

For more information on the use of independent contractors, visit AGC’s Labor & HR Topical Resources website. The primary category is “Other Legal Issues” and the secondary category is “Independent Contractors.”

Editor’s Note: This article was written by guest author Maria F. Dwyer.  Maria is a Member in Clark Hill’s Labor and Employment Group.  This publication is intended for general information purposes only and does not and is not intended to constitute legal advice. The reader must consult with legal counsel to determine how laws or decisions discussed herein apply to the reader's specific circumstances. 


Construction HR & Training Professionals Conference Offers Continuing Education Credits

At AGC of America, we know how important maintaining professional credentials are to those who hold such designations. Therefore, AGC’s Construction HR & Training Professionals Conference will offer opportunities for HR, training and workforce development professionals to earn recertification credits from the HR Certification Institute (HRCI). 

At AGC of America, we know how important maintaining professional credentials are to those who hold such designations. Therefore, AGC’s Construction HR & Training Professionals Conference will offer opportunities for HR, training and workforce development professionals to earn recertification credits from the HR Certification Institute (HRCI). 

HRCI credits qualify for PHR, SPHR, and GPHR recertification through HRCI.  Conference attendees will be eligible to receive 8.75 general HRCI recertification credits. Additionally, attendees at this year’s special pre-conference Strategic Management Workshop will be eligible to earn 4.0 business management and strategy recertification credits. Participants who register for and attend both events can earn a total of 12.75 recertification credits.

Beyond the continuing education credits, the conference and the workshop will offer a wide variety of presentations, panels and roundtable discussion sessions on topics that are important to the commercial construction industry’s employers, HR professionals, and training managers.

The conference will be held in St. Louis, Missouri, Oct. 7-9.

Find complete session descriptions, schedule, registration, and hotel information on AGC’s website.


ACA Regulations Regarding Summary of Benefits & Coverage Requirements Finalized

The Departments of Health and Human Services, Labor, and Treasury (the “Departments”) recently finalized changes to regulations governing the summary of benefits and coverage (“SBC”), which were published in the Federal Register on June 16, 2015.

The Departments of Health and Human Services, Labor, and Treasury (the “Departments”) recently finalized changes to regulations governing the summary of benefits and coverage (“SBC”), which were published in the Federal Register on June 16, 2015.  The final regulations generally track the proposed regulations in codifying certain pieces of interim and informal guidance, including guidance regarding a plan sponsor’s responsibly to ensure compliance with the SBC rules if the plan sponsor chooses to contract with a third party with respect to SBC compliance.  The final regulations also contain provisions that are intended to reduce unnecessary duplication when providing SBCs and clarify that plan sponsors and issuers of insured coverage (and not self-insured coverage) must include an Internet web address where copies of the actual individual coverage policy or group certificate of coverage can be reviewed and obtained.  For employer-sponsored plans, the final regulations are generally applicable for SBCs issued in conjunction with open enrollments beginning on or after September 1, 2015, and for all other SBC distribution events relating to plan years beginning on or after September 1, 2015.
 
The proposed regulations contained proposed changes to the SBC template, uniform glossary, and other supporting documentation.  On March 30, 2015, the Departments stated in a Frequently Asked Question that the Departments wanted to offer the public more time to review and provide input before finalizing those documents.  The Departments intend to finalize the new SBC template and associated documents by January 2016.  The new template will apply for coverage that begins on or after January 1, 2017, including any coverage with an open enrollment in fall of 2016.

For additional Affordable Care Act resources, visit AGC’s members’-only webpage at www.agc.org/ACA


Editor's note:  This article was written by guest authors Jennifer A. Craft and Christina M. Cerasale.  Both Christina and Jennifer are members of Seyfarth Shaw’s Employee Benefits and Executive Compensation Team.  This publication is intended for general information purposes only and does not and is not intended to constitute legal advice. The reader must consult with legal counsel to determine how laws or decisions discussed herein apply to the reader's specific circumstances.


Multiemployer Pension Reform Regulations Issued

The federal agencies tasked with administering the AGC-backed Multiemployer Pension Reform Act of 2014 (“MPRA”) recently issued multiple regulatory measures to implement the new law.

The federal agencies tasked with administering the AGC-backed Multiemployer Pension Reform Act of 2014 (“MPRA”) recently issued multiple regulatory measures to implement the new law. 

The Pension Benefit Guaranty Corporation (“PBGC”) has released an interim final rule prescribing the application and notice requirements for multiemployer pension plans seeking to take advantage of expanded partition opportunities under MPRA.  The rule became effective upon its publication in the Federal Register on June 19.

On the same day, the Internal Revenue Service (“IRS”) issued temporary regulations and a proposed rule prescribing the application and notice requirements for plans that are deemed to be in “critical and declining status” and are seeking to suspend benefits in accordance with MPRA. The IRS also issued Revenue Procedure 2015-34, which details the application procedures and includes a model participant notice. 

Also on that day, Treasury Secretary Jacob Lew appointed Kenneth Feinberg to serve as a Special Master to oversee the benefits suspension program.

AGC submitted comments to the IRS and PBGC on prior information requests about partitioning and benefit suspensions under MPRA, and will continue to monitor developments.

For more information, contact Jim Young at youngj@agc.org or (202) 547-0133.

 


AGC Submits Comments to EEOC on Proposed Wellness Rule

On June 19, AGC submitted comments to the U.S. Equal Employment Opportunity Commission (EEOC) regarding its proposed rule to amend the regulations and interpretive guidance implementing Title I of the Americans with Disabilities Act (ADA) as they relate to employee wellness programs.

On June 19, AGC submitted comments to the U.S. Equal Employment Opportunity Commission (EEOC) regarding its proposed rule to amend the regulations and interpretive guidance implementing Title I of the Americans with Disabilities Act (ADA) as they relate to employee wellness programs.  The proposed rule, if implemented, will amend the ADA regulations that provide guidance on the extent to which employers may use incentives to encourage employees to participate in wellness programs that include disability-related inquiries and/or medical examinations.

AGC’s comments address concerns regarding the proposed provisions that may discourage employers from including wellness programs as part of their overall health care management system.  This would result in the loss of valuable employee financial incentives and increased costs of company-provided health insurance.  As a result, AGC asked the EEOC to consider the following recommendations prior to issuing a final rule:

Increase the amount of the total reward incentive of health-contingent wellness plans from 30% to 50% – aligning it with that of the Health Insurance Portability and Accountable Act (HIPAA) and the Affordable Care Act (ACA); 

Address wellness plans that cover dependents – the proposed rule was silent on this subject;

Allow employers to decide, on a case-by-case basis, whether or not to offer a full incentive to employees who decline to participate in a wellness program;

Reduce the burdensome requirements for employers associated with proving that participating in a wellness plan is voluntary; and

Waive the employer notice requirement for wellness programs that offer an incentive of 20% or less.

For more information on the proposed rule, including a Fact Sheet and FAQ’s, visit the EEOC’s website.  


New Checklist Available to Help Contractors Assess Compliance with OFCCP’s Disability Rule

The U.S. Department of Labor’s Office of Federal Contract Compliance Programs (OFCCP) recently made available on its website a Checklist for Compliance with Section 503 of the Rehabilitation Act of 1973, a law requiring that federal contractors take affirmative action and do not discriminate against individuals with disabilities.  The new tool was created to help contractors assess their compliance with the regulations that govern the law.

The U.S. Department of Labor’s Office of Federal Contract Compliance Programs (OFCCP) recently made available on its website a Checklist for Compliance with Section 503 of the Rehabilitation Act of 1973, a law requiring that federal contractors take affirmative action and do not discriminate against individuals with disabilities.  The new tool was created to help contractors assess their compliance with the regulations that govern the law. 

The Checklist was developed by the Department of Labor’s Office of Disability Employment Policy in coordination with OFCCP.  Contractors are not required to use the Checklist, and using the Checklist does not ensure compliance with the Section 503 regulations. However, using theChecklist may help contractors enhance their awareness of its affirmative action obligations regarding individuals with disabilities and alert them to potential compliance problems.

The Checklist can be found on OFCCP’s website. For additional OFCCP information, tools and resources on the Section 503 regulations, click here.  For AGC resources, log in to the AGC website at www.agc.org, then go to the Labor & HR Topical Resources page at www.agc.org/topicalresources, and select the category “EEO” and subcategory “Affirmative Action/EEO.”  Note that AGC’s Affirmative Action Manual for Construction includes information about OFCCP’s recently revised regulations under Section 503.


New Infographic Helps Veterans Determine Their Status under VEVRAA

The U.S. Department of Labor’s Office of Federal Contract Compliance Programs (OFCCP) recently released an infographic to help veterans determine whether or not they are protected under the Vietnam Era Veterans’ Readjustment Assistance Act of 1974 (VEVRAA).

The U.S. Department of Labor’s Office of Federal Contract Compliance Programs (OFCCP) recently released an infographic to help veterans determine whether or not they are protected under the Vietnam Era Veterans’ Readjustment Assistance Act of 1974 (VEVRAA).  Recent changes to VEVRAA regulations require contractors to invite applicants to voluntarily self-identify as protected veterans at both the pre-offer and post-offer phases of the application process. While OFCCP developed the infographic in response to requests from the veteran community, the tool may also be used by employers during the hiring process to help applicants determine their protected status.

The infographic is available for download here. For additional OFCCP information, tools and resources on the Section 503 regulations, click here.  For AGC resources, log in to the AGC website at www.agc.org, then go to the Labor & HR Topical Resources page at www.agc.org/topicalresources, and select the category “EEO” and subcategory “Affirmative Action/EEO.”  Note that AGC’s Affirmative Action Manual for Construction includes information about OFCCP’s recently revised regulations under VEVRAA.


NLRB “Quickie Election” Rule Survives Second Legal Challenge

The National Labor Relations Board (“NLRB” or “Board”) has successfully defended recent changes to union-representation case procedures for the second time in federal district court.  In the latest case, Chamber of Commerce v. NLRB, the AGC-supported U.S. Chamber of Commerce and Coalition for a Democratic Workplace, along with others, sued the NLRB over the rule in the U.S. District Court for the District of Columbia.  On July 29, the court granted the NLRB’s motion for summary judgement. 

The National Labor Relations Board (“NLRB” or “Board”) has successfully defended recent changes to union-representation case procedures for the second time in federal district court.  In the latest case, Chamber of Commerce v. NLRB, the AGC-supported U.S. Chamber of Commerce and Coalition for a Democratic Workplace, along with others, sued the NLRB over the rule in the U.S. District Court for the District of Columbia.  On July 29, the court granted the NLRB’s motion for summary judgement. 

As previously reported, the “quickie” or “ambush” election rule makes a multitude of changes to the union election procedures, effectively shortening the process in a manner expected to make union organizing easier.  The rule took effect on April 14.  On June 1, a federal district court in Texas dismissed the first challenge to the rule, which was brought by chapters of the Associated Builders and Contractors (“ABC”) and of the National Federation of Independent Businesses (“NFIB”).  ABC and NFIB have filed an appeal.

In the Chamber case, the plaintiffs raised numerous challenges to individual provisions of the rule.  The court rejected each of them, finding the following regarding the rule:

  • The requirement that employers post a particular workplace notice about the filing of a petition for an election does not violate the National Labor Relations Act (“NLRA”) or the First Amendment to the Constitution.
  • The provision granting NLRB regional directors the discretion to decline to hear evidence on individual voter eligibility and inclusion issues does not violate the NLRA or the Fifth Amendment to the Constitution, and is not arbitrary and capricious.
  • The requirement that an employer file a written Statement of Position one day before the pre-election hearing does not violate the NLRA or the Fifth Amendment to the Constitution.
  • The elimination of putting a hold on an election while the Board reviews any requests for review filed in favor of a directive that the NLRB regional director hold the election on the earliest date practicable does not violate the NLRA or the First Amendment to the Constitution, and is not arbitrary and capricious. 
  • The requirement that employers furnish the union with a voter list that includes not only employee names and home addresses, but also e-mail addresses and personal cell phone numbers does not violate the NLRA and is not arbitrary and capricious. 
  • The provision rendering post-election review of disputes by the Board discretionary and eliminating parties’ ability to stipulate to mandatory Board review is not arbitrary and capricious.

The court acknowledged that the plaintiffs’ “policy objections may very well be sincere and legitimately based,” but it found that the case “comes down to a disagreement with choices made by the agency entrusted by Congress with broad discretion to implement the provisions of the NLRA and to craft appropriate procedures.” 

The plaintiffs are considering an appeal.  AGC will monitor and report on significant developments.

For more information, contact Denise Gold, Associate General Counsel, at goldd@agc.org or (703) 837-5326.  Additional info on the rule is also available on the AGC website.  First log in as an AGC member at www.agc.org, then go to the Labor & HR Topical Resources page and select the main category Unions/NLRA and subcategory Union Organizing Campaigns & Representation Elections.  Note the items labeled “Samson, 2015.”


AGC Successfully Defends Zero-Tolerance Drug Policy

Siding with AGC of America, the AGC of Colorado and the Colorado Contractor’s Association, the Colorado Supreme Court has unanimously held that a state law insulating Colorado residents from prosecution for making medical use of marijuana does not require the state’s employers to tolerate the same or apparently any other use of the drug.  The decision extends well beyond employees who use marijuana on the job, or show up under the influence of it.  In fact, the case involved an employee who used marijuana only at home and during non-working hours.

Siding with AGC of America, the AGC of Colorado and the Colorado Contractor’s Association, the Colorado Supreme Court has unanimously held that a state law insulating Colorado residents from prosecution for making medical use of marijuana does not require the state’s employers to tolerate the same or apparently any other use of the drug.  The decision extends well beyond employees who use marijuana on the job, or show up under the influence of it.  In fact, the case involved an employee who used marijuana only at home and during non-working hours. 

Strictly speaking, the case is limited to the medical use of marijuana but its logic would extend to any recreational use that the state has similarly sought to decriminalize.  How the case will affect other states, and how they interpret and apply any similar laws that they have adopted, is much harder to predict.  In the absence of much or any other case law on the other state laws that seek to legalize marijuana, the case could influence thinking outside Colorado.

The name of the case is Brandon Coats v. Dish Network.  The ultimate question that it presented was whether a Colorado employer could lawfully discharge an employee for violating its zero-tolerance drug policy even where the only drug that the employee had used was marijuana and his use of the drug was off of the employer’s premises, during nonworking hours, and in accordance with state law. 

At the center of the legal debate was Colorado’s Lawful Off-Duty Activities Statute (LODAS), which generally prohibits the state’s employers from discharging employees for “engaging in any lawful activity.”  Under the circumstances, the employee’s use of marijuana did not violate state law.   The employee alleged and his employer did not dispute that he was licensed by the state of Colorado to make medical use of marijuana and that he used it within the limits of his license.  His use of the drug did, however, violate federal law, and the narrow legal question that the case presented was therefore whether LODAS refers to state law, federal law or both.

The trial court sided with the employer on the theory that state law merely provided the employee with an affirmative defense to criminal prosecution and did not go so far as to transform his medical use of  marijuana into “lawful activity.”  The Colorado Court of Appeals also sided with the employer but on the different theory that the employee’s activity was not “lawful” because it still violated federal law.      

Yesterday, the Colorado Supreme Court unanimously agreed with the court of appeals.  It declined “to engraft a state law limitation” on the meaning of “lawful,” and explained that LODAS used the term “in its general, unrestricted sense, indicating that a ‘lawful’ activity is that which complies with applicable ‘law,’ including state and federal law.”

In May of 2014, AGC of America joined its Colorado chapters and several other business organizations in filing a friend-of-the-court brief in the Colorado Supreme Court in support of the employer’s zero-tolerance policy.  The brief relied on the plain language of LODAS and warned that any contrary ruling would create conflicts with other Colorado laws and federal laws, including the Drug Free Workplace Act of 1988 and federal regulations relating to transportation.  Yesterday’s decision is a significant victory for the association.

For additional information on the various state laws that seek to legalize marijuana and how employers are responding to them, please contact Denise Gold at goldd@agc.org or Tamika Carter at cartert@agc.org.  Additional information is also available on the AGC web site.  After logging in at www.agc.org, go to the Labor & HR Topical Resources area at www.agc.org/topicalresources, then select the main category “Other HR Issues” and the subcategory “Drug & Alcohol Use and Testing.”


For more information or to contact us directly, please visit agc.org | © AGC, 2004 – All rights reserved