President Donald Trump has promised to undo Obama-era regulations that business groups say are overly burdensome. What does this mean for wage and hour laws that affect employers?
A panel of attorneys at the American Bar Association’s 11th Annual Labor and Employment Law conference on Nov. 11 discussed key issues the Trump administration will tackle—including the definition of joint employer and the Fair Labor Standards Act’s (FLSA’s) salary threshold for overtime exemption.
[SHRM members-only toolkit: Determining Overtime Eligibility in the United States]
Joint Employment
When is a joint-employment relationship established? The National Labor Relations Board’s (NLRB’s) controversial Browning-Ferris decision expanded joint-employer liability. The board found that “indirect control” over working conditions is enough to establish a joint-employer relationship, whereas the previous standard required an employer to have “actual, direct, and immediate” control. Under the National Labor Relations Act (NLRA), joint employers may have collective bargaining obligations.
Joint employers can also be held liable for FLSA wage and hour violations—though the definition is different under the FLSA. The Obama administration issued interpretations with a broad view of when two companies could be legally responsible for the same employee, said Jeremy Glenn, a management attorney with Cozen O’Connor in Chicago. However, the Trump administration announced in June that it was abandoning that guidance.
“Many viewed this as an indication of a shift in priorities,” Glenn said, noting that no replacement or new guidance has been issued.
Although the Trump administration could advocate for a narrow joint-employer definition, the decision is up to the courts, not the Department of Labor, said Patricia Smith, senior counsel with the National Employment Law Project in Washington, D.C. Smith was the solicitor of labor under former President Barack Obama.
The joint-employment definition is a court-made law that will remain the same until a judge rules otherwise, she added. The Department of Labor had issued compliance documents, not new interpretations of the law, she said.
Regardless of the federal standards, states also have their own authority to determine the definition of joint employer.
Congress could also change the standard. The U.S. House of Representatives passed the Save Local Business Act on Nov. 7. The bill would amend the definition under the FLSA and the NLRA. Smith said it would be a “very narrow” definition. Glenn called it “specific.”
For now, employers must continue to carefully review all contracts for staffing services, Glenn said. To the extent possible, employers should ensure that control over workers remains with the outside service.
Overtime Regulations
The fate of the FLSA’s overtime-exempt salary threshold for white-collar workers also remains undetermined. The Obama administration sought to raise the threshold to $47,476, but a federal judge in Texas deemed the rule invalid. For now, the 2004 threshold of $23,660 remains.
Secretary of Labor Alexander Acosta has said that the threshold should be raised—just not by so much as to “shock the system.”
Acosta has also said that he is dedicated to following the rule of law. Changing the threshold will require a new notice and rulemaking process. This process involves a comment period, review and an economic analysis, among other steps. “We’re talking a long time,” Smith said.
Regardless of what happens with the federal overtime rule, some states are moving forward with their own salary threshold hikes. California and New York, for example, have been steadily increasing their rates—and new levels will take effect soon.
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