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Two Rules Poised for Implementation in 2016

Submitted by Firm:
Cross, Gunter, Witherspoon & Galchus, P.C.
Firm Contacts:
Abtin Mehdizadegan, J. Bruce Cross, Misty Wilson Borkowski
Article Type:
Legal Update
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DOL Overtime Pay Update

On June 30, the U.S. Department of Labor (DOL) released a much-anticipated proposed rule change that would increase employer overtime obligations for an estimated 5 million employees - seeking to increase the minimum salary threshold to $970 per week (the equivalent of $50,440 annually) for "white collar" executive, administration, professional and computer employees.

As expected, the proposed rule generated a significant amount of comments - more than 250,000 - from employers and other stakeholders. The Obama administration has now indicated the highly controversial rule will not be issued before July 2016. But DOL officials have indicated that the rule is likely to be issued sometime closer to the end of the year while still leaving time for the rule to take effect before the president leaves office.

Click here to review the provisions of the proposed rule.

Keep in mind that a late 2016 publication/issuance date will likely create a short window for employers to comply. The effective date of the new regulations likely will not exceed 30 to 60 days after the final regulations are published. As a result, employers should consider the effect this proposed rule may have to their employment practices and bottom lines, and make preparations now to comply.

DOL's "Persuader" Rule Submitted to OMB for Review

The Department of Labor (DOL) confirmed last week that it has submitted its proposed revisions to the  "Persuader" Rule to the Office of Management and Budget for review. The proposed regulations - much-maligned by businesses, management and the American Bar Association - propose changes to the long-standing disclosure requirements under the Labor-Management Reporting and Disclosure Act (LMRDA or the Act). The Act applies to unions, union members, employees who work under collective bargaining agreements, employers, labor relations consultants, surety companies, trusts in which a union is interested and other "persons" as defined in the law who may be covered by the Act's provisions.

Under the LMRDA, employers are required to report to the DOL (on Forms LM-10 or LM-20) all consultants and attorneys from whom the employer receives advice regarding unionization in its workplace. Since 1959, there has been an Advice Exemption that excludes the disclosure of communications where an attorney or consultant has no direct contact with employees and limits his or her activity to providing employers or supervisors with advice or materials for use which the employer may utilize or reject. Under the Persuader Rule changes, such disclosures of advice must include any "indirect activity" by attorneys or consultants. These disclosures must be made even if a company's legal counsel and/or consultant(s) speak only with management. Specifically, the proposed changes would require, by law, the disclosure of the following thirteen new categories of information:

  • Drafting, revising or providing written or multimedia materials for presentation, dissemination or distribution to employees.
  • Drafting, revising or providing a speech for presentation to employees.
  • Drafting, revising or providing website content for employees.
  • Planning or conducting individual or group employee meetings.
  • Developing or administering employee surveys concerning union awareness, sympathy or interest.
  • Training supervisors or employer representatives to conduct individual or group employee meetings.
  • Coordinating or directing the activities of supervisors or employer representatives.
  • Establishing or facilitating employee committees.
  • Developing HR policies or practices.
  • Deciding which employees to target for persuader activity or disciplinary action.
  • Conducting a seminar for supervisors or employer representatives.
  • Other oversight activities.

Understanding the LMRDA's reporting and disclosure requirements is important to employers and unions alike. In addition to increased time and costs associated with providing the DOL with disclosure forms for every conversation with legal counsel, the Act provides for not only civil, but also criminal penalties for failure to adhere to its provisions. In fact, the Act allows for penalties of up to $10,000 and even one year in prison for flagrant violations.

Until the Final Rule is published, all of these changes are subject to change (whether more or less restrictive), yet the Final Rule is anticipated to follow the proposed rule's overall framework.

The Persuader Rule was first proposed in June 2011 and was met with fierce opposition, leading many to believe it had been dropped by the DOL when activity ceased in the fall of 2011. However, the OMB's Office of Information and Regulatory Affairs reported that the Rule will be finalized through OMB in early 2016, with implementation likely following within 60 to 90 days thereafter.

Prudent employers and human resource managers won't wait to familiarize themselves with these changes due to the significant penalties associated with any subsequent violations. Preparing your company for supervisor training, obtaining written materials for speeches and publications regarding unionization, and updating company policies should be completed, if at all possible, before the implementation of this Rule in order to take advantage of outside labor counsel.