Employment Regulation: Obama Regulatory Reform Initiatives Ignore Antiquated Wage-Hour Laws With New Burdens Added Elsewhere

September 01, 2011

The recent pronouncement by the White House that regulatory reforms will “reduce costs, simplify the system, and eliminate redundancy and inconsistency” is belied by the significant new regulations being pushed by DOL, including new disclosure requirements that could make companies’ sensitive compensation data a matter of public record.   Meanwhile, the Administration’s regulatory reform effort continues to ignore the most outdated of all employment laws — the Fair Labor Standards Act — despite the Association’s efforts to engage DOL in a dialogue with other stakeholders on how to address the law’s disconnect with the modern digital workplace.

Compensation Data Disclosure Initiative  In August, the Office of Federal Contract Compliance Programs (OFCCP) took initial steps in proposing one of the Obama Administration’s most controversial and disruptive regulations yet — a new “compensation data collection tool” that will require federal contractors and contract bidders to provide detailed compensation data as a condition of keeping and winning their contracts.  The data would not only include all forms of compensation, but also employee leave policies as well as comparative data, such as average tenures and  minimum/maximum salaries.  Moreover, all this data could become available to the public through Freedom of Information Act requests.  If promulgated, the new rules would effectively require all federal contractors and bidders to prove their innocence of pay discrimination and affirmative action violations through the annual submission of highly sensitive pay data.  At the same time, the EEOC is laying the groundwork for a similar disclosure requirement for all employers, not just government contractors.  HR Policy Association will submit comments on the OFCCP proposal, which are due October 11.

DOL to Require Notice to Employees of Overtime Eligibility  Though it has been delayed, the Department of Labor continues to project that it will issue proposed new FLSA recordkeeping rules requiring employers to provide all individuals treated as exempt or independent contractors with an explanation as to how they arrived at that conclusion.  The proposal flies in the face of pleas from employers for greater clarity in the rules governing the exemptions, which have been the subject of a 400 percent increase in lawsuits since the mid-1990s.  At a hearing this summer, HR Policy Chairman Randy MacDonald, Senior Vice President, Human Resources, IBM Corporation, made the strong case that the disconnect between the FLSA and the modern workplace, and the strictures thereby imposed on flexible workplace policies is “increasing tensions between employers, employees and regulators, with the only true beneficiary being the plaintiff’s bar.”

Social Media Legalities Continue to Evolve  As more and more companies continue to embrace social media as a useful tool in both human resource and business strategies, the legal pitfalls surrounding use of the new media have yet to be clarified.  At a special membership meeting this summer on social media, acting NLRB General Counsel Lafe Solomon indicated that the agency has been swamped with cases involving social media policies since he issued a complaint in a highly publicized case last November.  He has since issued a memo with guidance based on a number of cases he has acted upon, but more cases with more nuances are likely to continue to pile up.  Meanwhile, an EEOC attorney warned at a recent meeting against indiscriminate use of social media for employee background checks (discussed further in the next paragraph):  “If you wouldn't ask for it during an interview, don't search for it online.  It could possibly get you in trouble.”  Nevertheless, he acknowledged that the agency will apply “the same rules that we applied under traditional Title VII analysis” regarding an adverse employment action, whether information was obtained through “social media or through a more traditional means.”

Background Checks in the EEOC’s Crosshairs  Despite the pressures put on employers to maintain a safe workplace for employees and customers, the Equal Employment Opportunity Commission (EEOC) is laying the groundwork for new restrictions on the ability of employers to conduct criminal background checks on employees.  EEOC Chair Jacqueline Berrien expressed concern at an EEOC hearing this summer that employers’ use of such checks has a discriminatory impact on minorities, even though employers are already restricted by existing EEOC guidance as well as regulation under the Fair Credit Reporting Act.  In a letter to the EEOC, the Association argued that "in many cases, employers are required by law to conduct inquiries into the criminal background of applicants or employees" and that "employers face a real threat of negligent hiring and retention litigation which can leave the employer liable for substantial damages."  The EEOC is also considering new restrictions on credit checks.