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  • Surprise Plan for Calculating Overtime on Labor Dept. Agenda

    Employers Group | 05/16/2018 | News

    By Ben Penn

    The Labor Department intends to revise the law governing time-and-a-half overtime calculations.

    The DOL’s Wage and Hour Division will “clarify, update, and define regular rate requirements,” the administration announced as part of the unified regulatory agenda released May 9. The regular rate of pay refers to an employee’s typical hourly rate, which is multiplied by 1.5 to determine overtime earnings for hours exceeding 40 in a workweek.

    The previously undisclosed initiative is separate from an effort to modify the Obama administration’s rule to expand overtime access.

    Labor Department officials from the Obama and George W. Bush administrations contacted by Bloomberg Law offered a few prognostications on how the regulation may seek to revise the calculations in an employer-friendly manner.

    “When do you have to pay overtime on prizes, awards, bonuses that might be the number one question I get,” Tammy McCutchen, an attorney with management-side firm Littler Mendelson, told Bloomberg Law. “There’s a lot of confusion.” McCutchen was WHD chief from 2001 to 2004.

    The ambiguity in the short explanation provided by the department opens up multiple possibilities for how wage-hour rules could be changed when the proposal is released. Options could include modifying the Fair Labor Standards Act’s fluctuating workweek overtime calculations or amending how bonuses and commissions are treated when determining time-and-a-half wages.

    “It’s hard to say what they intend to propose,” Michael Hancock, a plaintiff-side lawyer with Cohen Milstein in New York, told Bloomberg Law in an email. “It’s a guess, and only a guess, that they will add categories of compensation that are excluded from the regular rate.” Hancock was a WHD assistant administrator in the Obama White House.

    “Regular rate regulations have not been updated in decades—even though compensation practices have evolved and clarity is needed,” a DOL spokesman said in a statement.

    The DOL anticipates releasing this regular rate of pay proposed rule in September, although agencies frequently stray from their original calendar estimates that are posted in the unified agenda.

    Job Training Rule Reversed

    The administration also presented for the first time plans to rescind nondiscrimination and equal employment opportunity rules that apply to job training programs. These rules were modified late in the Obama administration.

    The unified agenda is a semiannual report that lists each agency’s best understanding of where it intends to act in the next 12 months. It’s a preliminary overview that may change, as some actions may be added and others removed. Actions can be notices, proposals, or final rules.

    The WHD also formally announced plans to update the child labor protections under the Fair Labor Standards Act to allow teenagers to work longer hours in hazardous conditions. This rulemaking proposal, which is slated for October, was first reported by Bloomberg Law May 8.

    Wage-Hour Takes Center Stage

    Elsewhere in overtime rulemaking, the WHD now estimates a January 2019 release of its second stab in recent years at a high-priority rule designed to expand the number of workers eligible for overtime pay. This proposed rule marks the administration’s attempt to replace the Obama DOL’s more ambitious version of the rule, which would have doubled the salary level below which employees qualify for time-and-a-half overtime wages.

    A January release would be later than the October date the department had projected in last fall’s agenda. The delay comes as the division still awaits a Senate-confirmed administrator. Trump’s pick for the post, Cheryl Stanton, has been pending before the Senate since last fall.

    The WHD also projected an August publication of a proposed rule on tip pooling that incorporates the recently passed legislation to ban employers from skimming workers’ gratuities.

    The DOL’s Employment and Training Administration anticipates publishing a proposal in September to implement President Donald Trump’s executive order calling for the streamlining and expansion of U.S. apprenticeships. This means that arguably the White House’s top workforce initiative continues to linger, after earlier estimates to publish a proposal by last January.

    To contact the reporter on this story: Ben Penn in Washington at bpenn@bloomberglaw.com

    To contact the editor responsible for this story: Chris Opfer at copfer@bloomberglaw.com