Crackdown: Why Corporate Counsel Should Care About the Department of Labor

Crackdown: Why Corporate Counsel Should Care About the Department of Labor Image: Clipart

On March 4 the U.S. Department of Labor released its budget request for fiscal year 2015. The budget includes a whopping $11.8 billion in discretionary budget authority, and it provides for 17,763 fulltime equivalent employees.

In a press release, the DOL noted that the proposed budget contains “substantial investments” in its enforcement efforts. Loosely translated, that means, “Watch out, Corporate America.” Here are three things corporate counsel may not know about current priorities of the DOL.

1. Occupational Safety and Health Administration enforcement of whistleblower laws: The DOL budget includes $565 million for the Occupational Safety and Health Administration. While workplace safety is OSHA’s primary focus, the agency also is responsible for enforcing the whistleblower provisions of 22 federal laws with anti-retaliation provisions.

The whistleblower statutes enforced by OSHA include laws affecting the health care, food, finance, air travel, pipeline, transit, rail and other industries. The higher profile statutes include the Sarbanes-Oxley Act and the Affordable Care Act. OSHA maintains a separate website section for whistleblower issues at www.whistleblowers.gov.

There at least two reasons why whistleblower complaints likely will increase this year.

First, as of Dec. 5, 2013, individuals may file a whistleblower complaint with OSHA using a simple online form. Previously, there was no option to file a complaint online. This new development makes it easier for tech-savvy employees to file whistleblower complaints, but it otherwise does not change the complaint process.

Second, the U.S. Supreme Court’s March 4 decision in Lawson v. FMR LLC has refocused attention on the Sarbanes-Oxley Act (SOX). In Lawson, the Supreme Court clarified that SOX’s anti-retaliation provision protects not only employees of a public company but also employees of a private contractor, subcontractor or agent of a public company. Justice Sonia Sotomayor, in a dissent joined by the unusual duo of Justice Anthony Kennedy and Justice Samuel Alito, writes that the majority’s interpretation gives SOX’s anti-retaliation provision “a stunning reach.”

2. Wage and hour issues under the FLSA: Anyone who tracks federal court filings knows that cases under the Fair Labor Standards Act are all the rage. The FLSA’s technical requirements regarding overtime pay are not always consistent with pay practices that have developed in certain industries, and plaintiffs attorneys are actively looking for cases.

The DOL’s Wage and Hour Division also is searching for FLSA violations and finding them at an alarming rate. Since the beginning of 2009, the division has closed 145,884 wage and hour cases nationwide, and it has collected more than a billion dollars in back wages on behalf of 1,238,589 workers, according to a DOL news brief. As a result, employers’ lawyers have become accustomed to shepherding their clients through wage and hour investigations by the division.

Even the most conscientious companies unwittingly may be violating the FLSA. Common problems include poor recordkeeping, allowing nonexempt employees to perform work “off the clock” and misclassifying employees as exempt.

The proposed budget includes an increase of more than $41 million for the wage and hour division, so expect investigations and back wage assessments to continue.

3. Headaches for federal contractors: The DOL’s Office of Federal Contract Compliance Programs regulates federal contractors and oversees their affirmative action and recordkeeping obligations. OFCCP’s proposed budget is $107 million, including $1.1 million earmarked for identifying pay discrimination against female employees who are paid less than male counterparts for comparable work.

OFCCP is also focusing its efforts on military veterans and disabled workers, as shown by new regulations going into effect on March 24.

With respect to military veterans, the new regulations require covered federal contractors to engage in specific types of outreach and recruitment that target veterans and evaluate their progress annually. The regulations also require contractors to establish annual hiring benchmarks based on the national percentage of veterans in the workforce (currently 8 percent) or the employer’s own benchmark based on local data.

Similarly, the new regulations covering disabled workers require covered federal contractors to set a hiring goal of 7 percent disabled workers in each job group. The regulations also have new requirements regarding the recruitment and training of individuals with disabilities, plus recordkeeping and data collection to track disabled applicants and new hires. Applicants are to be invited to self-identify as disabled at the pre-offer stage, and incumbent employees periodically will be invited to self-identify as disabled.

OFCCP has stated that the hiring benchmarks are aspirational, and it will not penalize as a violation failure to meet the goal. Nonetheless, federal contractors are concerned about the benchmarks and whether the OFCCP will use them in combination with other factors, such as compensation irregularities, in enforcement actions.

The OFCCP’s updated Federal Contract Compliance Manual, a tome of some 536 pages, is available online at http://www.dol.gov/OFCCP/regs/compliance/fccm/fccmanul.htm.

The DOL has numerous other agencies, such as the Employee Benefit Security Administration, the Mine Safety and Health Administration and many more with authority to regulate, investigate and sanction certain employers. So, the legal department needs to review compliance with existing regulations affecting its industry, keep an eye out for new regulations, and be prepared for the DOL to come knocking on the company’s door.

Vianei Lopez Braun is a partner in Buck Keenan in Houston, where she represents employers in labor and employment law matters.

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