DOL Plans Changes to Child Labor, Regular Pay Rate and More

Author: Michael Cardman, XpertHR Legal Editor

May 14, 2018

A new regulatory agenda shows the US Department of Labor (DOL) intends to make changes to rules involving child labor, the regular rate of pay, the salary threshold for overtime-exempt employees, the minimum wage tip credit and more.

The DOL rarely meets the timelines it sets for itself, so the dates listed below should be considered a target rather than a hard deadline.

Updating Child Labor Rules for Apprentices and Student-Learners

The Fair Labor Standards Act (FLSA) prohibits minors from working in a variety of hazardous occupations. However, under certain conditions, apprentices and student learners are allowed to work in some of these occupations, including jobs involving:

  • Power-driven wood- and metal-working machines;
  • Slaughtering, meat and poultry packing, processing or rendering;
  • Balers, compactors and paper-products machines;
  • Certain saws;
  • Roofing; and
  • Excavations.

By October, the DOL plans to consider whether these rules "should be updated to reflect the current economic and work environments and to allow for safe and meaningful apprenticeship opportunities and student-learner programs."

Clarifying, Updating and Defining Regular Rate Requirements

The FLSA requires an employer to pay employees for overtime hours at one and one-half times their regular rate of pay. The regular rate of pay is determined by dividing an employee's total compensation in any workweek by the total number of hours worked. Almost all forms of pay - including an employee's hourly wages, salary, commissions or other forms of pay - must be included in this regular rate of pay, save for a few specific forms of compensation that may be excluded.

Among the exclusions are those found in section 207(e)(2) of the FLSA, specifically:

  • Payments made for occasional periods when no work is performed due to vacation, holiday, illness, failure of the employer to provide sufficient work, or other similar cause;
  • Reasonable payments for traveling expenses, or other expenses, incurred by employees in the furtherance of their employer's interests and properly reimbursable by the employer; and
  • Other similar payments to employees that are not made as compensation for their hours of employment.

Postponing the Overtime Rule

As many HR professionals surely recall, the DOL in 2016 issued new FLSA regulations that would have roughly doubled the minimum salary for many overtime-exempt employees from $23,660 to $47,476. But days before the regulations were to take effect, a federal district court issued a preliminary injunction that prevented the DOL from implementing and enforcing them. The court said the FLSA statute "does not grant the [DOL] the authority to utilize a salary-level test."

The DOL appealed to the 5th US Circuit Court of Appeals to overturn the injunction. Later, the Department of Justice (DOJ), on behalf of the DOL, filed a brief asking the 5th Circuit to reaffirm the DOL's statutory authority to establish a minimum salary level for FLSA-exempt employees. However, the DOJ asked the appellate court not to address the validity of the specific salary level set by the 2016 regulations, which, it said, the DOL "intends to revisit through new rulemaking."

Labor Secretary Alexander Acosta has said the minimum salary level should be "somewhere around $33,000" to account for the rate of inflation since 2004.

New rules had been planned for October 2018. But in the latest agenda, the target date is now pushed back to January 2019.

Aligning Tip Credit Regulations

Last year, the DOL had planned to rescind a 2011 Obama administration regulation providing that tips are the property of the employee, regardless of whether or not the employer has claimed a minimum wage tip credit.

But before the DOL could do so, Congress amended the FLSA to prohibit employers, including managers or supervisors, from keeping any part of tips received by employees for any purpose, regardless of whether the employer takes a tip credit.

The amendment also repealed DOL regulations that prevented employers from requiring employees who traditionally receive tips, such as restaurant servers, to share their tips with employees who usually do not receive tips, such as cooks and dishwashers. Consequently, an employer may now require tipped employees to share tips with non-tipped employees, as long as the employer does not take a tip credit.

By August, the DOL plans to align its regulations with this recent statutory amendment.