White-Collar Exemptions Advance to Next Stage; EEOC's Retaliation Guidance Update

Two recent federal agency actions may have a significant impact on employers in the near future.  The United States Department of Labor’s Wage and Hour Division (“WHD”) advanced its draft final rule for the White-Collar Exemptions one step closer to publication, while comments to the Equal Employment Opportunity Commission’s (“EEOC”) proposed retaliation guidance suggest employers may soon face increased investigation of meritless claims.  This article examines the status of the WHD’s final White-Collar Exemption rule, and an update regarding the EEOC’s proposed retaliation guidance.

A.        White Collar Exemptions Final Rule One Step Closer to Release

In November 2015, Campbell Litigation reported on the proposed changes to the White-Collar Exemptions (see related article), and in February 2016, Campbell Litigation reported the WHD was likely to publish the final rule by Spring 2016 (see related article).  On March 14, 2016, the WHD sent its proposed final rule to the White House’s Office of Management and Budget (“OMB”) for review, triggering a review period that can last up to ninety (90) days.[1]  While the OMB has until mid-June 2016 to finalize its review, given the likelihood of a Congressional Review Act challenge,[2] it is likely the OMB will finalize its review before June 2016.  A Congressional Research Service report estimated May 16, 2016 as the deadline for the WHD to publish the final rule to ensure that President Obama would review any Congressional Review Act challenge.[3]  Accordingly, employers should anticipate the final rule’s publication before May 16, 2016.[4]

Whenever the WHD publishes the final rule, employers will likely have approximately only two months to comply with the regulations.[5]  Employers should begin taking steps now in preparation for the regulations.  For example, employers should develop a proposed plan on how the company will handle formerly exempt employees who may be affected by the WHD’s changes and become non-exempt employees.  Although an employer likely has written policies for non-exempt workers requiring them to seek prior approval to work overtime, management must consider whether that policy can be applied, without modification, to former exempt employees who become non-exempt as a result of the regulations.  If the policy cannot be so applied, management must modify the policy to ensure that former exempt employees seek prior approval before working on their computers and IPhones after hours and determine how those employees will be disciplined for violating such a policy. The company should also consider how it will communicate the change of employee status to the new non-exempt employees.  Employers may have to deal with morale issues when a former exempt employee must now have his hours tracked and recorded by the company for compensation purposes.  Employers should also train affected employees on clocking in and out for work and recording properly recording all of their work time, to ensure that they are properly paid for all hours worked.

B.        Comments to EEOC’s Retaliation Guidance Suggest Employers May Face Increased Investigation of Meritless Claims.

In February 2016, Campbell Litigation reported the EEOC sought employer input on proposed retaliation guidance (see related article).  The comment period ended on February 24, 2016, and the EEOC received more than sixty (60) comments suggesting the proposed guidance may result in increased investigation of meritless claims based on improper expansion of Title VII and departure from relevant case law.[6]  Several employers commented that the proposed retaliation guidance, which EEOC investigators will use when handling retaliation charges, expands Title VII regarding what constitutes “participation”[7] and “opposition,”[8] and by terminating the “manager rule.”[9]  The proposed guidance also muddles Nassar’s “but for” standard in retaliation claims by potentially including a mixed-motive analysis, which Nassar explicitly rejected.[10]  Such changes may lead EEOC investigators to mistakenly pursue investigations that lack merit, and potentially issue probable cause findings based on incorrect or confusing guidance,[11] resulting in employers facing increased investigation of meritless claims.  The EEOC is reviewing the comments, and there is no current timetable regarding when the EEOC will issue its final enforcement guidance.[12]

C.        Conclusion

The WHD advanced the proposed changes to the white-collar exemptions one step closer to publishing a final rule.  Comments to the EEOC’s retaliation guidance highlight the potential for employer confusion, and also note where the proposed guidance departs from case law.  The WHD’s and EEOC’s actions will greatly impact employers, and Campbell Litigation will continue to track these actions and report back when further updates are available.

 

[1] Ben Penn, Overtime Rule Sent to OMB, Step Closer to Release, Bloomberg BNA Daily Labor Report (Mar. 15, 2016).  Either the WHD or the OMB may extend the ninety (90) day deadline, and there is no minimum review period.

[2] The Congressional Review Act allows Congress sixty (60) “legislative days” to review “major” published rules. See Chris Opfer, Trade, Overtime Showdown on Deck, as Lawmakers Look to Slow Election Season, Bloomberg BNA Daily Labor Report 2016 Labor Outlook, S-34 (Jan. 25, 2016).

[3] See Penn, supra note 1.

[4] While it is likely that the WHD will publish the final rule before May 16, 2016, Tammy McCutchen, the WHD’s former administrator under President George W. Bush, believes the WHD may look to the political calendar for the best time to publish the rule.  According to McCutchen, the WHD may publish the final rule September 2, 2016 with an effective date of November 1, 2016, just one week before the November 8, 2016 election.  Such a strategy would provide the rule’s supporters with a campaign slogan that they are giving workers a raise.  See Martin Berman-Gorvine, A November Overtime Surprise from the DOL?, Bloomberg BNA Daily Report (Mar. 14, 2016).

[5] Id.

[6] Kevin McGowan, EEOC’s Retaliation Proposal Gets Mixed Reviews, Bloomberg BNA Daily Report (Mar. 14, 2016).

[7] Id.  The proposed guidance includes “any informal or internal discrimination investigation” within the definition of “participation in agency proceedings.”  However, such an expanded definition of “participation” conflicts with several federal appeals court decisions and contradicts the plain language of Title VII. 

[8] Id.  The proposed guidance also expands “opposition” to include an employee who “explicitly or implicitly communicates a belief” that the employer may be engaged in discrimination without also requiring the employee to tie that communication to a protected class under Title VII.  For example, an employee who complains about discrimination against divorced employees would likely be covered under the proposed guidance despite Title VII not protecting divorced employees as a group and federal courts limiting protected opposition to opposition of unlawful discrimination. 

[9] Id.  The “manager rule” states that a supervisor or internal human resources employee who investigates a complaint or reports the complaint up the chain of command is not engaging in protected activity.  While the EEOC contends that Crawford v. Metropolitan Gov’t of Nashville and Davidson Cnty., 555 U.S. 271 (2009), implicitly overturn the “manager rule,” many courts have rejected or expressed uncertainty with such a proposition.

[10] Id.

[11] Id.

[12] Id.

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