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Under the Trump administration, the U.S. Department of Labor’s (DOL) Wage and Hour Division (WHD) has set an agenda for the rest of 2018 that addresses Obama-era overreaches and modernizes compliance assistance to ensure workers receive the wages they are owed and employers have the tools needed to abide by the law.

Part of the agenda includes the WHD’s plans to revise the Obama administration’s overtime final rule, as well as the rollout of the Payroll Audit Independent Determination (PAID) pilot program, which are both encouraging developments for the construction industry.  

Overtime Final Rule

On May 23, 2016, under the Obama administration, the WHD issued the overtime final rule, which would have changed the federal exemptions to overtime pay under the Fair Labor Standards Act (FLSA) for “white collar” workers by doubling the minimum salary level for exemption from $23,660 to $47,476 per year and automatically increasing it every three years. 

As a vocal opponent of the burdensome and costly overtime final rule, Associated Builders and Contractors (ABC) and a coalition of business groups filed a lawsuit against it in the U.S. District Court for the Eastern District of Texas on Sept. 20, 2016. Two months later, the court issued a preliminary injunction blocking the final rule from taking effect on Dec. 1, 2016.  

On July 26, 2017, the DOL under the Trump administration issued a request for information (RFI) related to the final overtime rule, and ABC submitted comments urging the DOL to immediately rescind the unlawful 2016 rule.

At the end of August, the U.S. District Court for the Eastern District of Texas granted a motion for summary judgment against the DOL’s overtime rule and converted the earlier preliminary injunction to a permanent injunction. ABC General Counsel Maury Baskin of Littler Mendelson P.C. filed the successful motion for summary judgment. 

Because of the final judgment by the district court, the pending appeal from the preliminary injunction is now moot and is expected to be dismissed. 

As of this writing, the administration has taken no further action on the 2016 overtime rule; however, the Fall 2017 Unified Agenda of Regulatory and Deregulatory Actions indicates the WHD plans to issue a notice of proposed rulemaking in October to revise the rule. 

The public will have the opportunity to comment. 

To learn more about the overtime final rule and RFI, visit dol.gov/whd/overtime/final2016.

PAID Pilot Program

In April, the WHD launched the PAID pilot program to help employers resolve inadvertent overtime and minimum wage violations under the FLSA. According to a DOL news release, the primary objective of this program is for employers to resolve these claims without litigation and ensure that employees can expeditiously receive back wages owed to them. The nationwide pilot program will last for about six months, followed by an evaluation with potential options for moving forward.  

To participate, employers should first review the DOL’s materials to fully understand the pilot program’s requirements, as well as complete the Compliance Assistance Review, which includes resources to help employers better understand minimum wage and overtime obligations under the FLSA. At the conclusion of the Compliance Assistance Review, a Certificate of Completion will be generated for the employer to save. 

The employer can then conduct a FLSA self-audit of its compensation practices. Next, the company must assemble the required information and contact the local WHD district office. Employers must be prepared to verify, among other conditions, that the employees included in a proposed PAID self-audit are not subject to prevailing wage requirements under the H-1B, H-2B or H-2A Visa Programs; the Davis Bacon Act or Related Acts; the Service Contract Act; or any executive order. The WHD will then evaluate the information and contact the employer to discuss next steps. 

The PAID program is accessible to all FLSA-covered employers, but employers currently under investigation by WHD, in the middle of litigation or threatened with litigation related to wage violations cannot participate. 

The DOL calls the PAID program a “win-win-win” for employees, employers and taxpayers, as it aims to return the wages earned, avoid unnecessary legal fees and streamline the process so the WHD can focus its resources on businesses intentionally violating the law. However, it remains to be seen whether employers will find it worthwhile to risk voluntarily exposing potential wage and hour violations to the government. In addition, the reaction of state enforcement officials to the federal program has been mixed.

To learn more about how the PAID program works, visit dol.gov/whd/paid

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