Debra S. Friedman of Cozen O'Connor. Debra S. Friedman of Cozen O’Connor.

Not surprisingly, employment law developments at the federal level in 2017 reflect policy changes that often come with new administrations. These changes largely can be characterized by what has been undone, halted or muddled in some way.

No New Overtime Rule 

The Obama administration’s overtime rule, if implemented, would have increased the salary threshold for the Fair Labor Standards Act’s (FLSA) white-collar exemptions from $23,600 per year to $47,476 per year. Last November, a federal district court in Texas entered a nationwide preliminary injunction blocking the rule’s implementation. However, the drama over the rule continued throughout this year, with no clear resolution in sight.

On Aug. 31, the federal district court in Texas granted summary judgment for the plaintiffs, finding that the salary level in the rule exceeded the DOL’s authority.  At the end of October 2017, the DOL appealed the decision invalidating its rule, and then in early November 2017 asked the Fifth Circuit to hold the appeal in abeyance while the DOL engages in further rulemaking on the issue.  Notably, Secretary Acosta has indicated that he supports an increase in the salary level, albeit a smaller increase than set forth in the now invalidated rule.

Meanwhile, in July 2017, before the Texas district court issued summary judgment, the DOL issued a Request for Information on the overtime rule, requesting comments on what changes the DOL should propose to the rule. Now we look to 2018 to see what those proposed changes may look like.

Protection of Transgendered Workers Became More Muddled

In October 2017, the Department of Justice (DOJ) declared in a memo that Title VII “does not encompass discrimination based on gender identity per se, including transgender status.” This represented a reversal of the DOJ’s prior position that transgender workers were protected by Title VII.  The statement also conflicted with the EEOC’s position that Title VII covers transgender workers, as well as decisions from courts in the First, Sixth, Ninth and Eleventh Circuits. Stay tuned for further developments on transgender rights in the workplace, in the military and in schools.

Circuit Courts and Federal Agencies Took Differing Views on Title VII’s Coverage

Federal courts are not aligned on whether Title VII covers sexual orientation. Indeed, this year the U.S. Court of Appeals for the Seventh Circuit held in Hively v. IvyTech Community College, 853 F.3d 339 (7th Cir. 2017), that Title VII prohibits sexual orientation discrimination whereas the Eleventh Circuit, in Evans v. Georgia Regional Hospital, 850 F.3d 1248 (April 4, 2017), reh’d en banc denied (July 6, 2017), reached the opposite conclusion. A petition for certiorari was filed in the Evans case in September 2017 and was recently denied. Meanwhile, the Second Circuit, en banc, is addressing Title VII’s coverage of sexual orientation discrimination in the pending case of Zarda v. Altitude Express, Inc., Case No. 15-3775.

While splits among the courts are not unusual, splits among federal agencies are less common.  Not only did 2017 show a split between the EEOC and the DOJ on transgender issues, but the two agencies have expressed divergent views on Title VII’s coverage of sexual orientation. While the EEOC is supporting coverage of sexual orientation under Title VII, the DOJ has filed an amicus brief in the Zarda case stating that sexual orientation is not actionable under the statute.

Fair Pay and Safe Workplaces Executive Order

Signed by former President Barack Obama on July 31, 2014, the Fair Pay and Safe Workplaces Executive Order would have required prospective federal contractors on contracts exceeding $500,000 to publicly disclose violations of certain labor laws within the prior three years. The executive order also contained provisions restricting the use of mandatory arbitration agreements in certain circumstances and required contractors to provide detailed wage statements to their employees.

On Oct. 24, 2016, the United States District Court for the Eastern District of Texas entered a nationwide preliminary injunction enjoining implementation of the reporting of labor law violations and the restrictions on use of mandatory arbitration agreements. In March 2017, President Trump revoked the entire Fair Pay and Safe Workplaces Executive Order. This was an early example of the Trump Administration taking steps to reduce the government’s collection of data from employers.

The EEOC’s Plan to Collect Pay and Hours Worked Data on the 2017 EEO-1 Report Halted

In 2016, the Equal Employment Opportunity Commission (EEOC) proposed revisions to the EEO-1 report that would have required all employers with 100 or more employees to submit employee pay data and hours worked, broken down by gender, race, and ethnicity. The EEOC and the DOL planned to use the collected data for enforcement purposes and also hoped that requiring employers to report pay data every year would result in a decrease in pay disparities without agency intervention.

On Aug. 29, 2017, the Office of Management and Budget (OMB) initiated a review and stay of the EEOC’s plan to collect pay and hours worked data on the EEO-1 report. Therefore, employers are not required to report pay and hours worked data on their 2017 EEO-1 Reports, which are due to be filed by March 31, 2018. Moreover, this additional data collection is unlikely to go into effect for 2018 EEO-1 Reports given the Trump Administration’s rollback of other initiatives requiring employers to share more data with the government.

Trump Administration Nullified OSHA’s Attempt to Cite Employers for Years-Old Recordkeeping Violations

In the waning days of the Obama administration, the Occupational Safety and Health Administration (OSHA) issued what is sometimes referred to as “the Volks II Rule.” That Rule  would have permitted OSHA to cite employers for failing to record injuries or illnesses for up to six (6) months after the five-year record retention period expired, thereby creating a 5 ½ year statute of limitations. On April 4, 2017, President Trump overturned the Volks II Rule. Accordingly, the statute of limitations for failing to record injuries and illnesses remains at six (6) months, in accordance with the time frame set forth in the statute. Employers, however, must still retain their injuries and illness records for 5 years.

Employer Liability Under the Fair Labor Standards Act

In June 2017, DOL Secretary Alexander Acosta withdrew informal guidance issued in 2015 and 2016 by the Obama administration in an apparent attempt to rein in potential expansion of employer liability under the FLSA. Specifically, the withdrawn guidance, in the form of two Administrator Interpretations, had set forth expansive views of joint employer liability and independent contractor misclassification. The guidance, while not legally binding, could have resulted in more litigation and liability for employers. While withdrawal of the guidance does not significantly change the current landscape in which courts find employers liable under varying tests, this step is a signal to employers that the current administration is likely more employer-friendly than the previous administration.

The Affordable Care Act

Throughout 2017, the Trump administration repeatedly has tried to repeal and replace the Affordable Care Act (ACA), but it currently remains the law of the land. The Senate version of the tax reform bill, passed in early December 2017, includes repeal of the individual mandate. Accordingly, portions of the ACA still could be repealed at the end of 2017 or in the coming year.

All in all, 2017 was not a year of groundbreaking developments in employment law at the federal level. Yet through a series of orders, actions and statements, the stage has been set for potentially more significant changes in 2018 and beyond.

Debra S. Friedman is a member of the law firm Cozen O’Connor in the firm’s Philadelphia office. Friedman can be reached at 215-665-3719 or DFriedman@cozen.com.