The DE OFCCP Week in Review (WIR) is a simple, fast and direct summary of relevant happenings in the OFCCP regulatory environment, authored by experts John C. Fox, Candee J. Chambers and Cynthia L. Hackerott. In today’s edition, they discuss:
- FTC Jumped into the “Joint-Employer” Fray and Also Broadened Its Attack on Non-Competition Agreements to Franchise Agreements
- OFCCP’s Congressional Budget Justification Is Chock-Full of Insights Into the Agency’s Future Plans & Past Performance
- U.S. EEOC Annual Performance Report Touts An Increase In Performance Equivalent to Its Increase in Staffing in FY 2022 While General Counsel Performance Fell off Almost 22% Despite 3% More Lawyers
- U.S. Justice Department Issued Guidance on FOIA Presumption of Openness
- President Biden Formally Sent to the U.S. Senate Julie Su’s Nomination to Be the Next Secretary of Labor
- OFCCP Launched (Again) a Mega Construction Program
- Biden Administration Marked “Equal Pay Day”
- With Regulatory Proposal Still Pending, U.S. FTC Announced a 4th Noncompete Enforcement Action This Year
- U.S. Appeals Court for Third Circuit Ruled PTO Is Not “Salary” Under the FLSA…So, Employers May Dock PTO for Productivity Failures
- House EWC Chair Foxx & Senator Cassidy Concerned About Validity of Labor Advisors Policy
- OFCCP Announced AAP Certification Portal to Open March 31 with June 29 Deadline
- In Brief
- Looking Ahead: Upcoming Date Reminders
Friday, March 10, 2023: FTC Jumped into the “Joint-Employer” Fray and Also Broadened Its Attack on Non-Competition Agreements to Franchise Agreements
If you did not think things were bad enough already between private corporations in the U.S. and the Biden Administration, the Federal Trade Commission (“FTC”) has now posted a “Request for Information” (“RFI”) seeking public comment on franchise agreements and franchisor business practices. The FTC now seeks evidence of how franchisors may exert control over franchisees and their workers, thus now raising the “joint-employer” issue, this time through the eyes of the FTC and the panoply of statutes it enforces.
At the same time, the FTC surprisingly also announced its interest to extend its prohibition on non-compete agreements to franchise agreements and directed the public to comment on the franchise agreement restrictions by April 19, 2023—the date the FTC’s comment period closes on its view that non-compete agreements violate the FTC Act.
The public may submit comments on the RFI (other than as to the non-compete issue as to corporations and/or franchise agreements) here no later than May 9, 2023.
The FTC’s RFI, accompanying press release, and related webpage, do not state that there will be any subsequent Federal Register publication of this RFI.
- For another recent development in the franchise/franchisee area, see also our recent report on a new bill in the California State Assembly that would make all fast-food restaurant franchisors liable for franchisee violations of certain labor and employment laws.
In this new RFI, the FTC referred to its pending proposal to ban corporations subject to the FTC’s authority from imposing noncompete agreements on their employees, independent contractors, and volunteers (see update story below). The FTC noted that for its noncompete regulatory proposal, the agency is interested in public comments on the question of whether that proposed Rule should also apply to noncompete clauses between franchisors and franchisees.
Comments related to the use of noncompete restrictions in franchise agreements MUST be submitted as part of the noncompete Rulemaking through April 19, 2023. The RFI is separate and distinct from the noncompete Rulemaking proceeding, the FTC noted. Therefore, comments submitted in response to the RFI will not automatically become part of the Rulemaking record for the noncompete Rule, the FTC cautioned.
Monday, March 13, 2023: OFCCP’s Congressional Budget Justification Is Chock-Full of Insights Into the Agency’s Future Plans & Past Performance
The 34-page OFCCP full fiscal year (“FY”) 2024 Congressional Budget Justification (“CBJ”) revealed key aspects of the agency’s future plans and past performance metrics. We reported last week that OFCCP’s FY 2024 budget request was unrealistic and angered many on Capitol Hill: $151,462,000 and 620 FTEs, a 36.48% increase over OFCCP’s FY 2023 allocation of $110,976,000 and 495 FTEs.
The following nine paragraphs highlight several key points of interest in OFCCP’s CBJ. Page numbers cited indicate the printed PDF (not digital) page numbers (to line up with the Table of Contents).
Monday, March 13, 2023: U.S. EEOC Annual Performance Report Touts An Increase In Performance Equivalent to Its Increase in Staffing in FY 2022 While General Counsel Performance Fell off Almost 22% Despite 3% More Lawyers
Agency Increased Monetary Benefit Collections Almost $30 Million Over FY 2021
The U.S. Equal Employment Opportunity Commission (“EEOC”) obtained over $513.7 million in monetary benefits for victims of discrimination in fiscal year (“FY”) 2022. That was almost a $30 million increase (almost +5.8%) compared to FY 2021 during which the EEOC recovered approximately $484 million for employees and Applicants. (That approximately 5.8% increase in monetary benefit collections very closely approximated the EEOC’s increase of approximately 5.6% in actual employee headcount in FY 2022 (to 2,040), see below.)
Meanwhile, while employers may rejoice that the EEOC’s Office of General Counsel filed far fewer lawsuits in FY 2022 than in FY 2021, federal taxpayers might not join in that celebration (see below).
The EEOC also reported that it resolved over 65,000 charges of alleged unlawful discrimination and conducted more than 3,000 free outreach events reaching almost 220,000 individuals. In the federal sector, the agency resolved 9,336 hearings, recovered more than $132 million for federal workers and applicants from federal taxpayer funds, and significantly reduced the federal hearing inventory by 25% from FY 2021 to FY 2022.
In a statement, the EEOC noted that it also worked to manage increased demand for services from the public as the nation emerged from the COVID-19 pandemic. In FY 2022, the agency received 73,485 new discrimination charges, almost 20 percent more than in FY 2021. The agency also handled more than 475,000 telephone call inquiries – from the public, an 18 percent increase from FY 2021. The EEOC also managed 32 percent more email inquiries from the public than in the previous year.
In addition, the Commission (curiously and it appears erroneously) reported that it focused on growing its workforce by filling 352 new “positions” and 500 total staff vacancies in FY 2022, the majority of which were in frontline positions. However, the EEOC’s Fiscal Year 2023 Congressional Budget Justification (“CBJ”) (looking back at FY 2021 and FY 2022 data) reported a Full Time Equivalent (“FTE”) employee headcount growth in FY 2022 of only 143 (from 1,927 FTE in FY 2021 to 2,070 FTE (Est) in FY 2022). Moreover, the EEOC’s Fiscal Year 2024 Congressional Budget Justification, released to the public on Monday of last week: March 13, 2023 (looking back at data from FY 2022 and FY 2023) further updated the FTE number for FY 2022 by reducing it from the EEOC’s previously reported estimate of 2,070 to only 2,041 (actual) FTE employees on-roll in FY 2022 (or a 5.6% FTE headcount increase between FY 2021 and FY 2022). (NOTE: We cannot reconcile the EEOC’s conflicting reports of its growth in employee headcounts other than to believe it misspoke when reporting filling 352 new “positions” when it likely meant to write that it hired 352 new employees, over 200 of whom worked part-time).
This is in stark contrast to OFCCP’s performance metrics which showed a decrease in both the number of OFCCP audits and backpay collections even after an increase in staffing levels.
While EEOC Investigators Fell Forward With More Staff, The Lawyers Fell Back
In conjunction with the Annual Performance Report, the agency also released its Office of General Counsel (OGC) Annual Report for FY 2022.
Looking Backward: In FY 2022, the OGC collected substantially more in monetary relief through litigation and settlements for lawsuits it had filed in earlier years than it had collected in FY 2021 = $34 Million vs $40 Million (FY 2022) (+17%).
Looking Forward: Even with six more lawyers (from 187 to 193 in FY 2022), litigation activity suffered a substantial decrease in FY 2022:
| FY2021 | vs | FY2022 |
| 116 merits lawsuits filed | vs | 91 merits lawsuits (-22% vs FY2021) |
| – 71 Title VII claims (61.2%) | vs | – 62 Title VII claims (68.1%) |
| – 3 EPA (Equal Pay Act) claims (2.6%) | vs | – 6 EPA claims (6.6%) |
| – 4 ADEA claims (3.4%) | vs | – 7 ADEA claims (7.7%) |
| – 43 ADA claims (37.1%) | vs | – 27 claims under the ADA (29.7%) |
| – 45 multiple individual claims (38.8%) | vs | – 38 multiple ind. claims (41.7%) |
Monday, March 13, 2023: U.S. Justice Department Issued Guidance on FOIA Presumption of Openness
Guidance Advised Partial Disclosure Even If Full Disclosure Not Permitted
In ritual fashion, every U.S. Attorney General now issues an “FOIA” Memorandum (and usually a supplement just for good measure) instructing the federal Executive Branch agencies to be transparent and release documents to the public. This is now a rite of passage in every Administration to demonstrate that the then current President is “transparent” (unlike the ones who went before).
The Office of Information Policy (OIP) within the U.S. Department of Justice (“DOJ”) has now issued new guidance on applying the “presumption of openness and the foreseeable harm standard” related to Freedom of Information Act (“FOIA”) requests.
Note: The FOIA itself presumes the releasability of all documents in the possession of the Executive Branch of the federal government. The FOIA then sets out nine “exemptions” from mandatory disclosure that the covered federal agencies may invoke, in their discretion, to deny the release of documents in their possession to requesters.
This new guidance addressed the key elements emphasized in Attorney General (AG) Merrick Garland’s March 15, 2022, FOIA Guidelines memorandum to the heads of all Executive branch departments and agencies. (In other words, we meant it then, but in case you missed it last year, here it is again…and, oh, we really mean it now!) Or, in other words, nothing new here. Public relations event.
Presumption of Openness
In the March 2022 guidelines memo, AG Garland directed the department and agency heads to “apply a presumption of openness in administering the FOIA.” “[I]n case of doubt, openness should prevail,” he stated. The AG also made clear in the memo that the DOJ will not defend nondisclosure decisions that fail to apply this presumption. The new guidance advised agencies to review records with an eye toward disclosure and with transparency in mind, a DOJ statement noted. “When an agency determines that it cannot or should not make full disclosure of a requested record, FOIA requires that it ‘consider whether partial disclosure of information is possible’ and ‘take reasonable steps necessary to segregate and release nonexempt information,’” the OIP advised in the guidance.
Foreseeable Harm Standard
The guidance also provided advice to agencies when applying the “foreseeable harm standard” in light of case law that has developed since this standard was codified by the FOIA Improvement Act of 2016. Agencies should analyze records on a case-by-case basis while employing practical and efficient means of assessing foreseeable harm with the information and context readily available to them, the guidance stated. Communication is also key. Agencies should communicate promptly with requesters throughout the request process, including by providing status updates, and clearly explaining the basis for denials in response letters, along with acknowledging that they have considered the foreseeable harm standard when asserting exemptions, the guidance instructed.
Tuesday, March 14, 2023: President Biden Formally Sent to the U.S. Senate Julie Su’s Nomination to Be the Next Secretary of Labor
Two weeks after President Biden announced his intention to do so, the President formally sent to the Senate his nomination of Acting Secretary of Labor Julie Su to replace Marty Walsh as the U.S. Secretary of Labor. Prior to Walsh leaving the agency last week, Su had served as Deputy Secretary of Labor. As per the usual practice, the Senate sent the nomination to its Committee on Health, Education, Labor, and Pensions for initial consideration.
The President announced his intent to nominate Su on Tuesday, February 28. We explained here how a President “announcing an intent to nominate,” rather than simply sending the nomination to the Senate is a classic move in the controversial candidate Capitol Hill “nomination playbook.” Biden’s act of formally sending the nomination to the Senate indicates that Senate Majority Leader Schumer (D-NY) now believes he has the 51 votes he needs for the U.S. Senate to confirm Ms. Su in the Secretary of Labor’s position.
Tuesday, March 14, 2023: OFCCP Launched (Again) a Mega Construction Program
Agency Plans Compliance Assistance at Initial Project Stages & Subsequent Audits
Every OFCCP Director since Cari Dominguez in the George Herbert Walker Bush Administration (the Dad) has announced amid grand fanfare that it is launching a major compliance initiative in the construction industry by announcing a woozy-doozie wham- bam “Mega Construction Project Program.” Each announcement promises to immediately end what each OFCCP Director usually characterizes as “rampant” or “widespread” employment discrimination in the hiring of African Americans and women in the construction trades. The twist in OFCCP’s latest outing is the shift of emphasis from African Americans to women.
Note: Despite all the hoopla, OFCCP has reported one construction discrimination settlement about every three+ years. Indeed, we can only find three OFCCP Conciliation Agreements with construction contractors in the last 10 years alleging employment discrimination, and only one we can remember or find during the tenure to date of the Biden OFCCP.
The New News
OFCCP chose “Equal Pay Day” 2022 to announce another launch of its “Mega Construction Project Program.” Apart from the public relations opportunity Equal Pay Day offered, the Biden White House has asked the main federal discrimination law agencies to gear up discrimination enforcement programs for the coming spend this year of $65 Billion made available primarily to the construction industry at the tail-end of the COVID-19 pandemic pursuant to the 2021 Bi-partisan Infrastructure Investment and Jobs Act.
Under OFCCP’s latest “Mega Construction Project Program,” OFCCP officials hope to connect with the General Contractor (“GC”) on so-called Mega Construction Projects (“MCPs”). MCPs are large federal construction projects valued at $35 million or more (this number has varied over the last three decades between $25 million and at one point swelled for a moment to $100 million) – some part of which must be federal funding – and that last more than one year.
Note: $35 Million is not a large construction project and won’t buy you a very large building…and in urban areas, you could buy less than 3 miles of a four-lane federal highway laid with concrete. There are some intersections and bridge overpasses which alone would exceed $35 million in construction costs.
The idea is for OFCCP to meet with the project General Contractor BEFORE the work begins and before the GC’s subcontractors hire up for the job to make sure the subcontractors are aware of their non-discrimination duties by offering “compliance assistance” to the GC and its subcontractors.
“Engagement through the Megaproject Program can help provide women with access to good jobs in traditionally male-dominated occupations like the construction trades and can help to close gender and racial wage gaps,” OFCCP Director Jenny Yang asserted in her blog for Equal Pay Day 2023.
For their part, General Contractors are likely to look at OFCCP with some surprise since almost all of them are having problems themselves, as are their subcontractors, finding enough qualified construction craft workers to perform the work. They are not excluding anybody from working with any semblance of construction craft experience. Indeed many contractors are not bidding new work for lack of human resources and many are delaying the onset of work hoping to find more construction employees to hire.
For the initial group of designated Megaprojects, OFCCP reports that it will work with the U.S. General Services Administration and the U.S. Department of Transportation – two Bipartisan Infrastructure Law (“BIL”) funding agencies. For each MCP, OFCCP will provide free, continuous, on-the-ground assistance to help project owners with stakeholder outreach and information sharing, providing connections to recruitment sources in the community. “From the earliest stages of a designated Megaproject, OFCCP will engage a wide range of stakeholders in the community – including worker advocates, community-based organizations, and local recruitment sources – to remove barriers to opportunity and foster strong connections and build trust with the community,” the announcement stated.
OFCCP’s 34-page full Congressional Budget Justification (“CBJ”) further detailed the agency’s plans for its Mega Construction Project Program. “After launching the Megaproject Program in FY 2023 with an initial list of BIL-funded projects, in FY 2024 OFCCP will continue to work with federal agencies awarding BIL, CHIPS and Science Act, and Inflation Reduction Act funds to strengthen interagency collaboration, clarify the mechanisms and instruments by which qualified construction projects will be identified and selected, and ultimately broaden the pool of construction projects participating in the program,” the agency stated.
Megaproject Compliance Evaluation Plans
In Tuesday’s announcement, OFCCP also said it will conduct compliance reviews to evaluate contractors’ anti-discrimination and equal opportunity practices. “Once ground has broken on a Megaproject and the work has progressed for several months, OFCCP, through a neutral process, will schedule contractors for compliance evaluations,” the agency also noted in its CBJ. “To support this work, OFCCP will hire 36 employees, including Megaproject Regional Coordinators, Megaproject Leads (district level), Megaproject Liaisons with funding agencies, Industry Specialists with knowledge of key industries and trades, and Data Scientists,” the agency’s CBJ explained.
The Cloud Hanging Over This Second Biden OFCCP Construction Industry Enforcement Re-Launch
A federal court entered a judgment against OFCCP in a lawsuit it filed in 2017 (part of “the surge” of retaliatory lawsuits OFCCP filed against federal contractors as the Obama Administration was leaving office) against a mid-Atlantic construction contractor for failing to cooperate with an OFCCP audit the contractor perceived to be unlawful. OFCCP’s ill-conceived lawsuit back-fired, however, on the agency when OFCCP’s implementation of its Mega Construction Project Program during the Obama OFCCP era was found to have unconstitutionally targeted construction contractors for audit. The Court made its finding despite OFCCP’s false public claims that it was selecting construction contractors using only “neutral” selection protocols. OFCCP then stopped all construction audits nationwide while the Trump Administration revamped the entire OFCCP construction program just in time for the arrival of the Biden Administration.
The Biden OFCCP re-launched the agency’s construction program with the issuance of a specialized Corporate Scheduling Announcement List for construction contractors. So far so good. The re-launch fell into immediate disrepair, however, with OFCCP Compliance Officers apologizing to most construction contractors they were auditing that they had had no training and were confused about what they were supposed to do, and when. There were also many reports of OFCCP summarily closing construction audits in mid-stride with the audit only half completed. (No contractors complained about that.)
There were also many reports that OFCCP Compliance Officers (“COs”) in the last round of these ill-fated construction audits candidly advised the contractors they were auditing that the COs did not understand how construction companies operated and were confused about what documents they should examine. Many of the audits also occurred toward the tail end of the construction activity when few, and sometimes none, of the construction crafts were still on the job. There were numerous humorous reports, too, of OFCCP auditors also showing up on wet mud construction projects in street shoes and high heels without hard hats, steel-toed boots or adequate protective gear that OSHA standards required. The onset of many audits were delayed to allow the contractor to scamper around their supply shops to properly outfit and provision OFCCP investigators with sufficient protective gear to allow them to go out on a project site to see the work in progress and to interview employees or access construction H.R. personnel. We also heard the story about an OFCCP District Director who insisted in advance of an audit on a federal military property that he would NOT need clearance and proper protective equipment to get on base. Rather, he assured the construction contractor base military personnel would simply “waive him through” on the strength of his OFCCP credentials. Well, that did not quite happen, of course, so they called that one a mulligan and set another day to start that audit.
One senior OFCCP official internally called the OFCCP program “a mess.” Thereafter, the agency quickly slowed its audits of construction constructors in 2022 so the agency could regroup. OFCCP is now, again, emerging from the rubble of its last two efforts at driving a construction enforcement program forward. The construction community is crossing its fingers that OFCCP has now trained its employees both as to the way the industry operates and also as to OFCCP procedures, forms, construction audit protocols and needed personal protective equipment when on a job site.
Tuesday, March 14, 2023: Biden Administration Marked “Equal Pay Day”
Biden Administration officials made the expected round of statements marking “Equal Pay Day” 2023 – the day that marks how far into the new year all women, on average, must typically work to earn, with their prior year’s earnings, what all men, on average, were paid the year before.
“This year, we mark Equal Pay Day on March 14, 2023—almost a month earlier than we did back in 1996, ”observed Equal Employment Opportunity Commission (“EEOC”) Chair Charlotte A. Burrows. “While we have gradually chipped away at the gender pay gap, we still have significant work to do,” she added.
“In the U.S., women who work full-time, year-round, are paid an average of 83.7 percent as much as men, which amounts to a difference of $10,000 per year. The gaps are even larger for many women of color and women with disabilities,” the U.S. Department of Labor (“DOL”) noted its statement.
Equal Pay Day supporters acknowledge that they are comparing all men in all jobs to all women in all jobs and are not comparing the wages earned by men and women in similar jobs. The wage “gap” points up that women and men often occupy very different jobs with women occupying disproportionately lower paying jobs and men disproportionately occupying higher paying jobs (CEOs vs cashiers issue).
The DOL also used the occasion to highlight several agency initiatives related to pay equity in the implementation of the Bipartisan Infrastructure Law and the Chips and Science and Inflation Reduction acts. They include:
- OFCCP’s newest launch of its Mega Construction Project Program and a resource document entitled “Taking a Proactive Approach to Achieving Pay Equity,” which identified promising practices and risk factors for pay inequity.
- The Employment and Training Administration’s March 6, 2023, announcement of a cooperative agreement of nearly $20 million to support TradesFutures, the National Urban League, and their community partners to develop a strategy to substantially increase the number of participants from underrepresented populations – including women and underserved communities – in Registered Apprenticeships in the construction industry. The effort will enroll more than 13,000 participants in apprenticeship readiness programs and place at least 7,000 participants in construction industry Registered Apprenticeships, the DOL said.
- The Women’s Bureau posted a brief on the causes of the gender wage gap, (highlighting the fact that men and women often end up in different occupations and in different industries fueling the so-called “wage gap”. Not all industries pay the same, of course, nor do all jobs pay the same compensation). This brief also included new statistics and analyses of gender and racial wage gaps. The Bureau also published a second brief on salary history bans and legislative measures that prohibit employers from asking about prior salaries. [There is still a belief that employer knowledge of prior salary histories limits women’s wage growth even though there is no sense in any state that has banned employer inquiries about prior salary that this has lessened, let alone solved, the “pay gap”.]
- The ongoing Good Jobs Initiative [which is USDOL code language to describe union jobs] provides tools with practical strategies to increase equal employment opportunities on infrastructure projects, including using Project Labor Agreements as Tools for Equity [requiring union workforces] and establishing Access and Opportunity Committees, stakeholder groups that meet regularly to monitor and support diversity and equity goals on a specific project.
See also: President Biden’s Proclamation and OFCCP Director Jenny Yang’s blog.
Wednesday, March 15, 2023: With Regulatory Proposal Still Pending, U.S. FTC Announced a 4th Noncompete Enforcement Action This Year
FTC Also Seeking Information on Franchisor Business Practices
Even ahead of its pending formal Rule to ban non-compete agreements in the United States becoming Final, the U.S. Federal Trade Commission (FTC) announced an Order requiring manufacturing company Anchor Glass Container Corp (“Anchor”) to drop noncompete restrictions that it has imposed on its employees. Per the agency’s press release, the Order “bans Anchor from entering into, maintaining, enforcing or attempting to enforce, or threatening to enforce noncompete restrictions on relevant workers.”
According to the agency, the restrictions Anchor imposed constituted an unfair method of competition under Section 5 of the FTC Act. Section 5(a) of the FTC Act (15 U.S. Code § 45) provides that “unfair or deceptive acts or practices” in or affecting commerce are unlawful.
In light of this position, one wonders why the FTC believes it needs a formal Rule to authorize enforcement actions and new interpretations of its authorizing statute that it is already enforcing without the benefit of a Final Rule? Or is it that the FTC needs the formal Rule but is nonetheless illegally proceeding ahead without benefit of the needed formal Rulemaking?
Earlier this year, on January 4, the FTC also announced that it had sued three other companies (including two other glass container manufacturers) and two individuals, also forcing them to abandon noncompete restrictions imposed on employees. The FTC finalized consent orders in those cases on February 23 (see here and here) and March 8 (see here). Those actions marked the first time that the agency has sued to halt what it alleges are “unlawful noncompete restrictions” in violation of Section 5 of the FTC Act.
Starting the year out with a bang, the FTC first released its noncompete regulatory proposal on January 5, 2023 and also published it in the Federal Register on January 19. The proposed Rule would:
- prohibit employers (nationwide) from using noncompete clauses in their contracts with employees, independent contractors, and “volunteers,” and
- require employers to rescind existing noncompete agreements and actively inform workers that they are no longer in effect.
When the FTC published its proposal on January 19th, we discussed its provisions here. Last week, the Commission extended the previous March 20, 2023, public comment deadline to April 19, 2023. Comments may be submitted here. In last week’s episode of “DE Under Three” WIR guest author Jay J. Wang further discussed this proposal with Candee Chambers.
Similar to the pending (i.e. still not finalized) regulatory proposal, the FTC Order also banned Anchor from telling a relevant employee or other employers that the employee is subject to a noncompete. “Anchor must, for the next 10 years, provide a clear and conspicuous notice to any new relevant employees that they may freely seek or accept a job with any company or person, run their own business, or compete with Anchor at any time following their employment,” the press release also stated.
Wednesday, March 15, 2023: U.S. Appeals Court for Third Circuit Ruled PTO Is Not “Salary” Under the FLSA…So, Employers May Dock PTO for Productivity Failures
But, Employers Must Also Consider State Laws Which Vary on This Point
Paid time off (PTO) constitutes a fringe benefit that is not part of an employee’s salary for the purposes of the Fair Labor Standards Act (“FLSA”), a unanimous three-judge panel of the U.S. Third Circuit Court of Appeals ruled. Therefore, employers may legally dock PTO when salaried workers do not meet productivity standards. Circuit Judge Kent A. Jordan wrote the opinion for the court in Higgins v. Bayada Home Health Care Inc (Case No. 21-3286).
Background: The FLSA and its implementing regulations forbid deductions from an employee’s “salary.” However, the appeals court concluded that PTO constitutes a “fringe benefit,” rather than “salary” under the FLSA. While “salary is a fixed amount of compensation that an employee regularly receives, PTO, though having a monetary value, is more appropriately defined as a fringe benefit, which has no effect on the employee’s salary or wages, and which may be irregularly paid out, such as when an employee separates from a company,” Judge Jordan wrote.
A registered nurse and her co-plaintiffs filed a collective action seeking class-action status alleging that their employer, a company providing medical and related support services for patients in their homes, violated the FLSA by making certain deductions from their accumulated PTO. Under the employer’s policy, when employees exceeded their productivity minimums, they received additional compensation. However, if employees failed to meet their weekly productivity minimums, the company withdrew from their available PTO to supplement the difference between the points they were expected to earn and what they actually earned.
Judge Jennifer P. Wilson of the U.S. District Court For the Middle District of Pennsylvania (in Scranton) ruled in favor of the employer. Judge Wilson concluded that an employer may deduct fringe benefits if an employee fails to meet an expectation, such as a productivity minimum, so long as the employee’s salary remains the same. Affirming, the Third Circuit panel held “based on the plain meaning of the regulatory language promulgated under the FLSA, that PTO is not part of an employee’s salary.” There is “a clear distinction between salary and fringe benefits like PTO,” the appeals court found.
Cautionary Note: Employers Must Also Consider State Laws Regarding PTO
The Third Circuit’s ruling addressed only the federal FLSA. Some state pay laws contain provisions that are more protective of PTO. Therefore, employers must consider not just the federal FLSA, but also state wage laws when both designing new pay and PTO policies and determining how much PTO to credit an employee as “vested.”
Thursday, March 16, 2023: House EWC Chair Foxx & Senator Cassidy Concerned About Validity of Labor Advisors Policy
In January, we reported that the U.S. DOL & White House OMB directed federal agencies to designate “labor advisors” responsible for improving federal contractors’ compliance with labor laws. White House Office of Management and Budget (OMB) Director Shalanda D. Young and then Secretary of Labor Martin J. Walsh issued a joint memo to the heads of executive departments and agencies directing them to designate these labor advisors by February 15, 2023. The memo provided that each of the 24 Chief Financial Officer (CFO) Act agencies must, and other federal agencies were encouraged to, “ensure that one or more labor advisors who are career employees are designated to advise agency officials on Federal contract labor matters.”
On Thursday, House Education and the Workforce Committee Chairwoman Virginia Foxx (R-NC) and Senate HELP Committee Ranking Member Bill Cassidy (R-LA) each issued statements (here and here) about a 3-page letter they sent to Acting Labor Secretary Julie Su and OMB’s Young regarding these labor advisors. They said that the policy “appears to resurrect unconstitutional policies” contained in the Obama Administration’s failed “Blacklisting” Rule” to sanction federal contractors.
We previously reported that on October 24, 2016, an Obama-appointed federal District Court Judge in Beaumont, Texas enjoined most portions of that Rule. On March 27, 2017, then-President Trump signed a Congressional Review Act (CRA) resolution killing all parts of the Rule. (Also see our story here for additional background on recent efforts to have the Justice Department impose a similar “blacklisting” measure.) In addition, Chair Foxx and Senator Cassidy expressed concern that the Biden Administration issued the policy via a joint memorandum rather than by formal Rulemaking, a familiar refrain in this Administration.
In their statements, the legislators also reported that they had sent a letter to the Government Accountability Office (“GAO”) asking for a formal legal opinion as to whether the policy violates the “substantially similar” prohibition of the CRA, “which prevents an agency from issuing regulations that are similar to those that have been overturned by a joint resolution of disapproval under the CRA,” they explained. They also urged the GAO to examine whether the policy meets the definition of a “Rule” under the CRA, which, they asserted, would allow for another resolution of disapproval.
Monday, January 20, 2023: OFCCP Announced AAP Certification Portal to Open March 31 with June 29 Deadline
On March 31, 2023, OFCCP will open its online Contractor Portal for federal contractors and subcontractors to certify that they have developed and maintained affirmative action programs (“AAPs”) for each establishment or functional unit, the agency announced. The certification deadline is June 29, 2023.
We reported previously that on August 31, 2021, OFCCP received approval (from the Office of Management and Budget (“OMB”) for the Contractor Portal Information Collection Request (“ICR”) under the Paperwork Reduction Act. However, we also explained that OFCCP does not have regulatory authority under the Administrative Procedure Act for the Contractor Portal.
In Brief
Thursday, March 16, 2023: OFCCP Announced March 31 Religious Exemption Rule Rescission Briefing
On March 31, 2023, OFCCP will hold a webinar briefing on its Final Rule to rescind, in its entirety and without replacement, the Trump Administration’s December 8, 2020, Final Rule, “Implementing Legal Requirements Regarding the Equal Opportunity Clause’s Religious Exemption.” The Trump-era Rule has been in effect since January 8, 2021. The new Final Rule is titled: “Rescission of Implementing Legal Requirements Regarding the Equal Opportunity Clause’s Religious Exemption Rule.”
John Fox’s recent WIR Bonus Blog discussed the Biden OFCCP’s Final Rule. That Blog also included an explanation OFCCP’s simultaneous informal oral policy pronouncement that henceforth, after the Rule’s rescission, that the agency would exalt the Executive Order 11246 rights of gay, lesbian and transgender Applicants and employees above the rights of federal contractors exerting exemption from the Order because of their religious beliefs, and pursuant to the Religious Freedom Restoration Act and under the First Amendment to the U.S. Constitution. John also offered his insights on what is really going on behind this action occurring only now after a 2+ year hiatus.
OFCCP stated it will discuss “the rescission of the 2020 religious exemption Rule and the continuing availability of the religious exemption for federal contractors that are religious corporations, associations, educational institutions, or societies.” Register for the webinar here.
Looking Ahead:
Upcoming Date Reminders
December 2022: U.S. DOL WHD’s (now overdue) target date to publish a Notice of Proposed Rulemaking to Analyze Public Comments on its proposed Rule regarding Nondisplacement of Qualified Workers Under Service Contracts (RIN: 1235-AA42)
December 2022: U.S. OSHA’s (now overdue) target date to publish its Final Rule on Occupational Exposure to COVID-19 in Healthcare Settings (RIN: 1218-AD36) (OSHA submitted this Final Rule to OMB on December 7, 2022)
December 2022: U.S. DOL’s OASAM’s (now overdue) target date to publish a Proposed Rule on “Revision of the Regulations Implementing Section 188 of the Workforce Innovation and Opportunity Act (WIOA) to Clarify Nondiscrimination and Equal Opportunity Requirements and Obligations Related to Sex” (RIN: 1291-AA44)
February 2023: U.S. DOL WHD’s (now overdue) target date for its Final Rule on Updating the Davis-Bacon and Related Acts Regulations (RIN: 1235-AA40)
March 2023: OFCCP’s target date for its Notice of Proposed Rulemaking to Require Reporting of Subcontractors (RIN: 1250-AA15)
March 2023: OFCCP’s target date for its Final Rule on Pre-Enforcement Notice & Conciliation Procedures (RIN: 1250-AA14)
March 2023: OFCCP’s target date for its Final Rule on “Technical Amendments” to Update Jurisdictional Thresholds & Remove Gender Assumptive Pronouns (RIN: 1250-AA16)
Monday, March 20, 2023: Comments due on OFCCP’s proposed modifications to its complaint intake process – https://www.regulations.gov/commenton/OFCCP-2022-0005-0001
Thursday, March 23, 2023 (at 2 pm ET): DE Masterclass Employment Law Roundtable | How To Test Whether The AI You Are Using For Employment Selections Is Lawful – Register here
Friday, March 31, 2023 (at 2 pm ET): OFCCP Religious Exemption Rule Rescission Briefing webinar – Register here.
April 2023: OFCCP’s target date for its Notice of Proposed Rulemaking to “Modernize” Supply & Service Contractor Regulations (RIN: 1250-AA13)
Friday, April 7, 2023: Comments due on OFCCP’s request to extend, without change, VEVRAA information collection requirements – https://www.regulations.gov/commenton/DOL_FRDOC_0001-2057
Wednesday, April 12, 2023: Comments due on the Office of Management & Budget’s “Initial Proposals for Updating Race and Ethnicity Statistical Standards” – https://www.regulations.gov/commenton/OMB-2023-0001-0001
Wednesday, April 12 – Friday, April 14, 2023: DEAMcon23 Chicago (Registrations still open; Agenda available here!)
Wednesday, April 19, 2023: Deadline to submit comments on FTC proposal to ban employers from implementing most worker non-compete agreements (previous March 20 deadline extended) – https://www.regulations.gov/commenton/FTC-2023-0007-0001
Special Note: You must ALSO address any comments related to the use of noncompete restrictions in franchise agreements in response to this FTC proposal to ban noncompete agreements (i.e., comments due April 19th). See the last para of our above March 10, 2023 WIR story.
Sunday, April 30, 2023: Deadline to apply for 2023 HIRE Vets Medallion Award Program – https://www.hirevets.gov/
May 2023: U.S. DOL WHD’s target date for its Notice of Proposed Rulemaking on Defining and Delimiting the Exemptions for Executive, Administrative, Professional, Outside Sales and Computer Employees (RIN: 1235-AA39)
May 2023: U.S. DOL WHD’s target date for its Final Rule on Employee or Independent Contractor Classification Under the Fair Labor Standards Act (RIN: 1235-AA43)
Tuesday, May 9, 2023: Public comment deadline on FTC’s “Request for Information” on franchise agreements and franchisor business practices – https://www.regulations.gov/commenton/FTC-2023-0026-0001
August 2023: U.S. NLRB’s target date for its Final Rule on Standard for Determining Joint-Employer Status (under the NLRA) (RIN: 3142-AA21)
August 2023: U.S. NLRB’s target date for its Final Election Protection Rule (RIN: 3142-AA22)
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