April 2019 Government Affairs Update

DOL Proposes Updates to Regular Rate Regulation

The U.S. Department of Labor on March 29 issued proposed updates to regular rate requirements under the Fair Labor Standards Act (FLSA). If allowed to take effect, this would be the first update to the rules for calculating base pay for overtime-eligible employees in more than 50 years.

The intent is primarily to clarify what forms of compensation employers can exclude from the regular rate calculation. Exclusions listed in the draft rule are

  • The cost of providing wellness programs, onsite specialist treatment, gym access and fitness classes, and employee discounts on retail goods and services;
  • Payments for unused paid leave, including paid sick leave;
  • Reimbursed expenses, even if the expenses were not incurred solely for the employer’s benefit;
  • Reimbursed travel expenses that do not exceed the maximum travel reimbursement under the Federal Travel Regulation System;
  • Discretionary bonuses;
  • Benefit plans, including accident, unemployment and legal services;
  • Pay for time that would otherwise qualify as hours worked, including bona fide meal periods, unless an agreement or established practice indicates that the parties have treated the time as hours worked; and
  • Tuition programs, such as reimbursement or repayment of educational debt.

DOL is also proposing to eliminate the restriction that callback pay and similar payments must be infrequent and sporadic to be excludable. The new rule states that such payments can be excluded as long as they are not made so regularly that they are essentially prearranged.

Comments are being accepted until May 28, 2019.

FLSA Joint Employment Rules Being Revised

DOL on April 1 followed its regular rate revision with a proposed update to rules regarding the responsibilities of employers and joint employers to employees in joint employer arrangements. The current rules have been in place since 1958.

A four-factor test will be used to determine whether a potential joint employer actually exercises the power to:

  • Hire or fire the employee;
  • Supervise and control the employee’s work schedules or conditions of employment;
  • Determine the employee’s rate and method of payment; and
  • Maintain the employee’s employment record.

The draft rule includes several examples to assist in clarifying joint employer status.

Comments on the proposed new joint employment rule are due by June 10, 2019.

SCOTUS Takes 3 Major Title VII Cases Involving LGBT Employees

The U.S. Supreme Court is set to review a set of cases that have the potential to answer the questions of whether Title VII of the Civil Rights Act of 1964 prohibits discrimination based on sexual orientation and transgender status.

The cases are

Union Wins Early Post-Janus Cases on Repayment of Fair Share Fees

The U.S. District Court for the Northern District of California ruled in favor of the union in Bermudez v. Service Employees International Union, Local 521 and Hough v. Service Employees International Union Local 521. The case were brought after the U.S. Supreme Court ruled in June 2018 that unions representing public sector workers could not collect fees from nonmembers for representing those individuals’ employment interests.

The plaintiffs in these cases worked for Santa Clara County. In deciding Hough, the judge stated that “there is a strong argument that when the highest judicial authority has previously deemed conduct constitutional, reversal of course by that judicial authority should never, as a categorical matter, result in retrospective monetary relief based on that conduct.”

Hough has been appealed to the U.S. Court of Appeals for the Ninth Circuit.

Congress Considers Dramatically Different Paid Family Leave Bills

Senate and House Republicans have submitted their New Parents Act of 2019 (S. 920/H.R. 1940) as an alternative to the Democrats’ Family and Medical Insurance Leave (FAMILY) Act (S. 463/H.R. 1185).

The Republican bill proposes allowing new or adoptive parents to use a proportion of their future Social Security retirement benefits to fund time off from work. Up to three months of leave would be available, with parents earning less than $60,000/year receiving 2/3 of their usual wages.

In return for accessing paid family leave, individuals could either delay retirement or accept reduced Social Security retirement benefits for as long as five years.

The Democrat-backed FAMILY Act calls for guaranteeing 12 weeks of paid leave for addressing a serious personal or family health issue, caring for a newborn or newly adopted child, or dealing with a family members’ military deployment or serious service-related injury. Individuals who took FAMILY Act leave would receive 66 percent of their wages up to a maximum of $4,000/month.

Money to pay for FAMILY Act leave would come from new 0.2 percent paycheck and payroll deductions.

Trump Administration Says It Will No Longer Defend the ACA

The U.S. Department of Justice on March 28 notified the U.S. Court of Appeals for the Fifth District that its attorneys would no longer argue in favor of upholding any part of the Affordable Care Act. Texas v. United States was brought by mostly Republican state attorneys general in an effort to have the entire ACA declared unconstitutional and unenforceable. A federal distract court judge agreed with the plaintiffs in December 2018. A group of mostly Democratic state attorneys generals have been recognized by the appeals court to defend the ACA.

Congressional Democrats Propose Strengthening ACA’s Access, Coverage Provisions

The Protecting Pre-existing Conditions and Making Health Care More Affordable Act (H.R. 1884) would

  • Offer more generous subsidies for those using health insurance exchanges by expanding eligibility for premium tax credits beyond 400 percent of the federal poverty level and increasing the size of the tax credit for all income brackets;
  • Ensure that access to subsidized coverage depends on the affordability of family coverage rather than self-only coverage;
  • Reverse the expansion of short-term, limited-duration health plans that are not required to comply with the ACA’s consumer protections;
  • Require funding for marketing, outreach and education, which has been cut by more than 80 percent;
  • Establish state-based reinsurance programs to help with high-cost claims and the impact of the individual mandate repeal; and
  • Provide funds for states to set up state-based exchanges.

SCOTUS to Rule on Title VII Procedural Case by June

U.S. Supreme Court justices on April 22 heard oral arguments in Fort Bend County v. Davis, a case for which IPMA-HR joined an amici curiae on behalf of the county. The case raises the issue of whether an employment discrimination lawsuit is barred if an employee fails to exhaust administrative remedies with the EEOC or a similar state agency before filing a lawsuit.

Lois Davis filed harassment and retaliation charges with the Texas Workforce Commission, which gave her the right to sue. After she filed the charges, she was terminated for failing to work on a Sunday when she said she had a religious obligation. She then filed a lawsuit in which, for the first time, she claimed that the county engaged in religious discrimination.

The Fifth Circuit ruled that Davis’s failure to exhaust administrative remedies is a waivable rule and not a jurisdictional rule that would bar the lawsuit from proceeding. Judicial circuits are split on this issue. A decision is expected by the end of the current Supreme Court term this June.

For additional information, please contact IPMA-HR Executive Director Neil Reichenberg at nreichenberg@ipma-hr.org.