The Department of Labor (DOL) has announced that effective January 6, 2027, the minimum wage for federal contractors' staff will increase to $14.05 per hour. Two federal appellate courts have ruled recently on employment-related cases. Keith Sonderling was confirmed by the Senate as the Secretary of Labor. The DOL has withdrawn a proposal that would have removed certain Fair Labor Standards Act (FLSA) interpretations from the Code of Federal Regulations because they were issued without formal notice and public comment.

Minimum Wage for Contractors to Increase – The DOL announced that effective January 6, 2027, the minimum wage paid to those working on federal contracts will increase to $14.05 per hour. The minimum wage paid to tipped employees working on federal contracts will increase on January 6 to $9.85 per hour. The current minimum wage for those working on federal contracts is $13.65 per hour and $9.55 per hour for tipped employees.

In 2014, President Obama signed Executive Order 13658 that established an hourly minimum wage for workers who are performing work under a contract with the federal government. The initial minimum wage, which was $10.10 per hour, has been subject to annual adjustments. President Biden signed an executive order in 2021 that increased the minimum wage for federal contractors to $15.00 per hour starting on January 30, 2022, and adjusting annually based on inflation. President Trump rescinded the executive order issued by President Biden thus reducing the minimum wage.

Appellate Courts Decide Employment Cases – The United States Courts of Appeal for the Second and Third Circuits have issued employment-related decisions recently. The cases concern the Americans with Disabilities Act (ADA) and the Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act.

In a case alleging a violation of the Americans with Disabilities Act, the United States Court of Appeals for the Third Circuit affirmed a summary judgment decision for the employer in the case of Cheryl Hileman v. West Penn Allegheny Health System, Inc. The Third Circuit concluded that “The disability discrimination and medical leave laws are shields against discrimination, not get-out-of-discipline-free cards.”

Cheryl Hileman worked the midnight shift at a hospital doing CAT scans. She had previously been reprimanded for calling in sick. She did not request a disability accommodation or medical leave. Several months later a coworker reported her for, among other things, sleeping while on duty. She denied sleeping but admitted she might have shut her eyes because of dry eyes resulting from a change in her diabetes medication. This was the first time she had disclosed her diabetes. She was fired for misconduct, resulting in this lawsuit. The District Court granted summary judgment for the employer. In affirming summary judgment, the Third Circuit believed that “When an employee is about to be fired for misconduct, she cannot save her job by belatedly telling her employer about a disability or medical need.”

The Second Circuit in the case of Silvia Diaz-Roa v. Hermes Law, P.C., held that the Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act enables a plaintiff who claims conduct including sexual harassment or sexual assault to invalidate an arbitration agreement that predates the alleged harassment or assault. Based on the language of the statute, the Second Circuit found that the use of the term “case” in the statute “plainly refers to a lawsuit as a whole…it invalidates the arbitration agreement as to all claims in that lawsuit, including any non-harassment claims.” This ruling is consistent with cases decided by the Sixth and Ninth Circuits.

The plaintiff sued her employers, asserting sexual harassment claims and non-harassment claims alleging she was terminated to prevent her from exercising stock options earned during her employment. The Second Circuit concluded that the word “case” that is used in the statute refers to an entire lawsuit, since it is a “commonplace descriptor for a judicial proceeding as a whole.”

Labor Secretary Confirmed – On September 30 the Senate confirmed Keith Sonderling as the Secretary of Labor. Sonderling served previously as the Deputy Secretary of Labor. In addition to serving as Secretary of Labor, he is the Acting Director of the U.S. Office of Government Ethics. He stated, “My mission is to ensure that American workers have the skills and resources they need to seize the incredible job opportunities being created across the country…” From September 2020 until August 2024, he served as a Commissioner of the Equal Employment Opportunity Commission (EEOC). During President Trump's first term, Sonderling served as Acting Administrator, Deputy Administrator, and Senior Policy Advisor of the Department of Labor's Wage and Hour Division.

DOL Withdraws Regulatory Proposal – The Wage and Hour Division (WHD) of the DOL has withdrawn a proposal to remove from the Code of Federal Regulations statements of general policy or interpretations that while not binding on the public, addresses the way in which the DOL proposes to exercise a discretionary power. The proposal would have removed those provisions that have not been subject to notice and public comment rulemaking. In announcing the withdrawal of the proposal, the DOL concluded that further rulemaking “no longer aligns with the Department’s needs, priorities, and objectives.”

WHD has provided Statements of General Policy or Interpretations Not Directly Related to Regulations addressing issues on which Congress has not delegated rulemaking authority. Examples cited by WHD are the principles of coverage under the FLSA, determination of an employee’s regular rate of pay, and definition of hours worked. Many of the interpretive policy statements were not issued through notice and public comment that applies to legislative rules. According to the DOL, when it initially proposed removing these sections, “Whether by courts or employers, undue deference to the guidance…is a foreseeable outcome of authorities implying that all content in the CFR has binding legal effect…”

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].