The U.S. Department of Labor (DOL) is looking at whether the Fair Labor Standards Act (FLSA) salary basis threshold should be raised and how it can ensure that employees are not misclassified as independent contractors. DOL also recently proposed changes to the tipped worker regulations, with comments due by August 23^rd. The House of Representatives has passed a bill designed to protect older workers, the due date for the submission of the EEO-1 form has been extended, and legislation has been introduced in both the Senate and House to modernize the Family and Medical Leave Act (FMLA).

DOL Examining Overtime Salary Threshold & Independent Contractors Status

In testimony before the House Education and Labor Committee, Department of Labor Secretary Walsh advised that the Labor Department is currently reviewing the salary basis threshold for overtime exemptions under the FLSA, which was increased in 2019 from $23,660/year to $35,568/year. Secretary Walsh believes the salary basis threshold is too low. He also indicated that as part of the review, the Labor Department will consider whether regular and automatic updates are needed.

In 2016, the Labor Department under President Obama had proposed a salary basis threshold of $47,476/year. This proposed rule was invalidated by a District Court and withdrawn by the Trump Administration.

Secretary Walsh stated in his testimony that the administration is “committed to ending the abusive practice of misclassifying employees as independent contractors, which deprives these workers of critical protections and benefits.” The administration included funds in the Labor Department’s proposed FY22 budget for stronger enforcement.

Four Democrats in the US Congress had written to Secretary Walsh on March 25^th to “urge DOL to quickly begin the rulemaking process to update the salary threshold and to propose a strong threshold. We encourage DOL to adopt a salary threshold in line with the historical high point of salary thresholds—the 55th percentile of earnings of full-timed salaried workers nationwide. This threshold would be at least $82,732 by 2026.”

Labor Department Issues Proposed Tipped Worker Rule

The Department of Labor issued a proposed rule designed to limit the amount of non-tip producing work that a tipped employee can perform for an employer taking a tip credit. The Fair Labor Standards Act (FLSA) allows employers with tipped workers to pay as little as $2.13 per hour in wages while taking a credit against the tips earned by the employee to make up the balance of the federal minimum wage of $7.25 per hour.

The tip credit is only available when tipped employees perform work that is part of their tipped occupation. As examples of labor that produces tips or supports tip producing work, the Labor Department cited waiting on tables, folding napkins, or refilling saltshakers. The proposed rule clarifies that if an employee performs work that directly supports tip-producing work for a substantial amount of time exceeding 20% of all the hours worked during the employee’s workweek or exceeds 30 continuous minutes, the worker is no longer performing labor that is part of the tipped occupation. Comments on the proposed rule are due by August 23, 2021.

House Approves ADEA Bill

The US House of Representatives approved the “Protecting Older Workers Against Discrimination Act” (H.R. 2062). In 2009, the US Supreme Court in the case of Gross v. FBL Financial Services ruled that to prevail in an Age Discrimination in Employment Act (ADEA) case, individuals needed to prove that age discrimination was the “decisive and determinative cause” for the adverse action by the employer rather than just a motivating factor. This bill would reinstate the mixed-motive evidence standard so that individuals would, according to the sponsors of the legislation, only need to prove “age was one of a number of factors behind the employment decision rather than age being the but-for or sole motivating cause of the employer’s adverse action under the ADEA.” The goal of the legislation is to ensure that the evidentiary rules used in Title VII of the Civil Rights Act cases are the same in ADEA actions.

The sponsors of the legislation noted that courts have expanded the “but-for” standard established by the US Supreme Court in the Gross case to claims brought under the Americans with Disabilities Act, the Rehabilitation Act, and employer retaliation cases under Title VII. The bill would extend the mixed-motive evidentiary standards to these three statutes as well.

The bill needs to be considered next by the US Senate where Senator Robert Casey (D-PA) has introduced a companion bill (S. 880).

EEO-1 Deadline Extended

The Equal Employment Opportunity Commission (EEOC) has extended the deadline for filing the 2019 and 2020 EEO-1 forms from July 19^th until August 23^rd. The EEO-1 collects workforce data from private sector employers with at least 100 employees and federal contractors with 50 or more employees. The data reported includes the total number of full and part-time employees, their sex, race, and ethnicity, and their job categories. The EEOC opened EEO-1 data collection on April 26^th. Due to COVID-19, the EEOC delayed the EEO-1 data collection last year.

Family and Medical Leave Modernization Act

Representative Carolyn Maloney (D-NY) and Senator Richard Durbin (D-IL) have introduced the Family and Medical Leave Modernization Act (H.R. 2589, S. 1185). The House bill has 9 cosponsors while the Senate bill has 4 cosponsors and are pending before Congressional committees.

The legislation would update the Family and Medical Leave Act (FMLA) to:

• Modify the definition of family to include a domestic partner, parent-in-law, aunt, uncle, sibling, adult child, grandparent, grandchild, son- or daughter-in-law, and other significant relationship; and
• Guarantee that parents and other family caregivers can take time off to attend a medical appointment or school function, such as a parent-teacher conference, without risk of losing their job.  The leave granted in this section is limited to not more than 4 hours during any 30-day period or a total of 24 hours during a 12-month period.

Neil Reichenberg is the former executive director of the International Public Management Association for Human Resources. He is an attorney, a frequent writer and speaker on public policy and human resource issues, and an adjunct faculty member at George Mason University. For questions or additional information, contact Reichenberg at [email protected].