Tag: DOL

  • DOL files fresh appeal of a Texas decision vacating its new overtime rule

    DOL files fresh appeal of a Texas decision vacating its new overtime rule

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    Dive Brief:

    • The U.S. Department of Labor has appealed a Texas federal judge’s 2024 decision blocking its Biden-era final rule which sought to expand overtime pay protections under the Fair Labor Standards Act, according to a Feb. 28 court filing.
    • Last December, Judge Sam Cummings of the U.S. District Court for the Northern District of Texas ruled against DOL in Flint Avenue, LLC v. U.S. Department of Labor, vacating and setting aside the final rule. Cummings’ decision came just over one month after another Texas judge similarly vacated and set aside the rule in a separate lawsuit filed by the state of Texas and parties including the Plano Chamber of Commerce.
    • The appeal takes Flint Avenue to the 5th U.S. Circuit Court of Appeals, the same court in which DOL filed an appeal of the decision in the State of Texas case last year. DOL’s public affairs staff did not immediately respond to a request for comment. The U.S. Department of Justice, which represents the DOL, did not respond to a request for comment submitted via its online form.

    Dive Insight:

    The Feb. 28 notice of appeal may come as a surprise to employers who expected the Trump administration to abandon the final rule; attorneys who previously spoke to HR Dive said that the rule was effectively “dead” despite DOL’s State of Texas appeal because of the Trump administration’s conservative policy stance on overtime.

    In fact, the new administration had already filed motions in the 5th Circuit pertinent to overtime rule litigation. On Jan. 22, two days after President Donald Trump’s inauguration, DOJ attorneys sent a letter to the 5th Circuit requesting a 30-day extension on the deadline set by the court to file an opening brief in the State of Texas appeal. The court granted the request and the agency’s filing deadline is currently set to March 7.

    The April 2024 final rule proposed a two-step process that would have eventually raised the minimum annual salary threshold for overtime pay eligibility under the FLSA from $35,568 to $58,656 by Jan. 1, 2025. The rule would then have implemented a mechanism for automatically adjusting the threshold every three years using current wage data beginning in July 2027.

    But a series of Texas court decisions froze the rule. The judge in State of Texas held that the rule exceeded DOL’s authority and was unlawful. Likewise, Cummings said in his decision that he found the State of Texas judge’s reasoning “persuasive,” and he adopted the same reasoning in ruling for the plaintiffs.

    There is some intrigue in how the 5th Circuit might rule on the two appealed judgments given that the court signed off on DOL’s overall use of a salary basis test for determining overtime pay eligibility in last year’s Mayfield v. U.S. Department of Labor. The Mayfield plaintiffs alleged that the salary basis test had no basis in the FLSA’s text, but the 5th Circuit disagreed. The court did hold, however, that DOL “cannot enact rules that replace or swallow the meaning” of the FLSA’s text, adding that particular salary threshold may raise legal issues because of their size.

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  • DOL allows employers to self-correct 401(k) errors

    DOL allows employers to self-correct 401(k) errors

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    Employers can soon self-correct certain retirement plan contribution errors, thanks to federal regulations published Wednesday.

    Beginning March 17, employers may use a self-correction tool to “remedy delays in sending participant contributions, such as employee payroll deductions, and participant loan repayments to retirement plans,” according to a U.S. Department of Labor announcement.

    When the change was proposed two years ago, a business-side attorney said employers would likely welcome the option to self-correct as it would streamline the process.

    The correction program may allow employers and other plan officials to avoid certain civil enforcement actions and penalties under the Employee Retirement Income Security Act and the Internal Revenue Code, DOL said.

    “The Employee Benefits Security Administration is pleased to provide these improvements to our Voluntary Fiduciary Correction Program so that employers and other plan officials can take advantage of streamlined tools to correct legal violations, and America’s workers get full protection for their hard-earned benefits,” said Assistant Secretary for Employee Benefits Security Lisa M. Gomez in a statement.

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  • President-Elect Trump Nominates Lori Chavez-DeRemer for DOL Secretary and Linda McMahon for Education Secretary

    President-Elect Trump Nominates Lori Chavez-DeRemer for DOL Secretary and Linda McMahon for Education Secretary

    by CUPA-HR | December 10, 2024

    Over the past few weeks, President-elect Donald Trump has announced several nominations for leads at federal agencies. Of relevance to CUPA-HR members, Trump has nominated Rep. Lori Chavez-DeRemer (R-OR) to serve as secretary at the Department of Labor (DOL) and Linda McMahon to serve as the Department of Education (ED) secretary. The following analysis dives into how Chavez-DeRemer and McMahon may lead each agency’s regulatory action on a few of the most pressing policy issues.

    DOL Secretary

    FLSA

    Chavez-DeRemer was nominated to serve as labor secretary on November 22. Chavez-DeRemer was viewed as a surprising pick for many in the labor and employment policy space given her Congressional record and support from labor unions. Her nomination raises questions about the direction in which DOL will go under the Trump administration with respect to certain policies and regulations, such as the overtime regulations under the Fair Labor Standards Act (FLSA), joint employer regulations, and independent contractor regulations.

    As a reminder, the Biden administration’s overtime regulations were struck down in federal court on November 15. The ruling strikes down all components of the Biden administration’s rule, including the July 2024 and January 2025 salary thresholds and the triennial automatic updates. On November 26, however, the Biden administration filed a notice of appeal to the 5th U.S. Circuit Court of Appeals in hopes of reinstating the rule before their term ends.

    Chavez-DeRemer has not publicly supported or opposed the Biden administration’s overtime rule, but labor unions have supported the rule through regulatory comments and public statements. Many anticipated that a second Trump administration’s DOL would stop defending the Biden rule in court if the Biden administration chose to appeal. Given organized labor’s support of Chavez-DeRemer, there is a chance that DOL under her authority would continue to defend the rule in court. However, it appears unlikely that the rule in its entirety would be defended, and it is more likely that DOL would attempt to defend the July salary threshold only. As a reminder, the salary threshold increase that took effect on July 1, 2024, used the Trump administration’s 2019 overtime rule methodology to determine the level, which could lead to a possible reasoning for defending the July salary threshold level.

    Joint Employer and Independent Contractor Rules

    Similar to the overtime regulations, the future of other labor and employment regulations relevant to higher ed HR appears uncertain in the face of Chavez-DeRemer’s nomination. Two DOL regulations — the joint employer and independent contractor rules — seem certain to swing back in favor of policies like those implemented under the first Trump administration, but Chavez-DeRemer’s inconsistent record in Congress on both issues makes it unclear how DOL under Trump will regulate them.

    Notably, Chavez-DeRemer is one of three Republican cosponsors of the Protecting the Right to Organize Act, a Democrat-backed bill that would expand organized labor’s power over workers and employers. There are provisions in the PRO Act that a second Trump DOL is not anticipated to implement, including provisions to apply a controversial “ABC” test for worker classification under the National Labor Relations Act and to adopt a broader joint employer standard under the NLRA than the standard implemented by the Trump administration. Given her support for the PRO Act, Chavez-DeRemer could change direction from the anticipated actions expected from the Trump administration with respect to joint employment and independent contractor status, along with other labor policies.

    Education Secretary

    Linda McMahon was nominated to serve as ED secretary on November 19. McMahon’s nomination was also considered a surprise, but for reasons surrounding her previous experience. During Trump’s first term, McMahon served as the administrator of the U.S. Small Business Administration, and most recently, she served as co-chair of Trump’s transition team. She was previously an executive for World Wrestling Entertainment (WWE). With respect to education, McMahon served as a trustee for Sacred Heart University for over a decade, and she also briefly served on the Connecticut Board of Education.

    Title IX

    McMahon’s previous positions and experience do not provide much insight into her stance on higher education policy. That being said, we expect that McMahon will largely follow the education policy direction of President-elect Trump if she is confirmed. With respect to Title IX, it is expected that Trump will seek to reimplement his administration’s 2020 Title IX regulations nationwide, which we anticipate McMahon will follow. It remains to be seen if McMahon and the Trump administration’s ED will attempt to issue new Title IX regulations that may be more conservative than those issued in 2020 to address concerns regarding rights and protections for transgender students.

    Looking Ahead

    Both Chavez-DeRemer and McMahon will face Senate confirmation hearings by relevant oversight committees and votes by the full Senate. During confirmation hearings, more information about the nominees’ priorities at their respective agencies will be revealed. CUPA-HR will keep members apprised of any updates related to the confirmation process of Chavez-DeRemer and McMahon as well as regulatory updates from DOL and ED.



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  • DOL Issues Report on Coercive Contractual Provisions

    DOL Issues Report on Coercive Contractual Provisions

    by CUPA-HR | October 22, 2024

    On October 17, the Department of Labor’s (DOL) Office of the Solicitor (SOL) issued a Special Enforcement Report on “coercive contractual provisions.” The report lists several provisions they have seen included in employment contracts that the department believes “may discourage workers from exercising their rights under worker protection laws.” The report demonstrates recent actions taken by SOL to combat such provisions, but it does not include new enforcement actions against employers that use these provisions.

    In the report, SOL claims the provisions discussed are coercive, violate the law and have significant impacts on the most vulnerable workers. The report details seven types of contractual provisions they find especially concerning:

    1. Contractual provisions requiring workers to waive statutory protections, including those requiring workers to waive their rights to bring claims and recover damages under the Fair Labor Standards Act
    2. Contractual provisions that purport to require employees to agree that they are independent contractors
    3. Indemnification-type provisions and related counterclaims purporting to shift liability for legal violations to workers or other entities
    4. “Loser pays” provisions attempting to require employees to pay the employer’s attorney’s fees and costs if the employees do not prevail in litigation or arbitration
    5. “Stay or pay” provisions, including some training repayment assistance provisions, that purport to require workers to pay damages to their employer for leaving a contract early
    6. Confidentiality, non-disclosure and non-disparagement provisions
    7. Company policies that purport to require workers to report safety concerns to their employer before contacting any government agencies

    The report emphasizes that the Department of Labor is “not bound by private contracts or arbitration agreements between workers and employers” and thus “has a unique role to play in fighting the use of these ‘fine print’ or ‘coercive’ contractual provisions.” It provides examples of cases where the courts have found such agreements unenforceable or where DOL has pursued an injunction in federal court seeking an order blocking one or more contract provisions.

    Importantly, the report is largely a restatement of current law and, for the most part, does not outline new enforcement actions against employers for using these provisions. Instead, the report outlines the work SOL has done recently to fight against the coercive contractual provisions, including cases and amicus briefs filed against employers using such business practices.

    CUPA-HR will continue to monitor for additional resources from the Department of Labor that may impact contractual labor provisions.



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