The President’s first nominee was Lorelei Boylan.  She was nominated in May 2009 and withdrew her nomination in October of that year, after she drew criticism for her role in the Apparel Industry/Fair Wages Task Force at the New York State Department of Labor. 

Then, in January 2011, President Obama nominated Leon Rodriguez for the Administrator position.  At that time, Rodriguez was the Deputy Assistant Attorney General and Chief of Staff in the Civil Rights Division of the U.S. Department of Justice, where he oversaw the operations of the Division and lead its work on immigration and national origin-related civil rights matters.  In August 2011, President Obama withdrew his nomination without explanation.  Rodriguez currently serves as the Director of the Office for Civil Rights of the Department of Health and Human Services.

The Administration has made no announcement as to when—or whether—a new nomination would be sent to the Senate for confirmation.

Because the head of each Regional Office is a member of the Senior Executive Service, while the sub-regional offices are headed by attorneys at the GS-15 level, the reduction in the number of Regional Offices will result in a savings to the Solicitor’s Office.  It is anticipated that President Obama’s budget proposal for Fiscal Year 2013 will include a requirement that all federal agencies reduce the number of regional offices.

The Secretary of Labor filed amicus briefs in both cases, but the results of her efforts differed dramatically.  In both cases, she argued that the PSRs were not exempt under the outside sales exemption because they did not make sales.  The Second Circuit, in the Novartis case, held that the Secretary’s interpretation of the outside sales exemption, as espoused in her amicus brief, was entitled to controlling deference.  The Ninth Circuit, however, saw it differently:  “We conclude that we owe no deference to the Secretary's current interpretation of the regulations, and, in any event, we respectfully disagree with that interpretation.”

The Ninth Circuit’s refusal to defer to the Secretary’s interpretation was based on the court’s view that in the regulations and in her amicus brief, the Secretary had merely parroted the statutory requirement that a salesperson is someone who makes sales, and had not used her expertise to clarify or explain what was meant by that term.  The court also noted that the Secretary had acquiesced in the sales practices of the pharmaceutical industry for over 70 years.

The Ninth Circuit examined the nature of the heavily-regulated pharmaceutical industry and concluded, “In this industry, the ‘sale’ is the exchange of non-binding commitments between the PSR and physician at the end of a successful call. Through such commitments, the manufacturer will provide an effective product and the doctor will appropriately prescribe; for all practical purposes, this is a sale.”

Interestingly enough, SmithKline agreed that the Supreme Court should review the Ninth Circuit’s decision, even though it had prevailed in that court, in the interest of resolving the conflict among the circuits.  Of course, SmithKline will urge that the Ninth Circuit, rather than the Second Circuit, got it right, both in terms of the deference owed to the Secretary of Labor and the applicability of the outside sales exemption.

The Wage and Hour Division of the Department of Labor has announced the results of the first year of the agency’s multi-year enforcement initiative focusing on the gas station industry in New Jersey.  During FY 2011 (the year ending on September 30, 2011), Wage-Hour conducted 74 investigations of gas station facilities throughout the state, recovering $1,014,895 in back wages for 295 workers.  BP-branded stations accounted for 69 of the establishments investigated.  Non-BP stations whose owners also had BP stations were found by Wage-Hour to have similar violations.

The map also pinpointed Royal Palace, another area restaurant.  What popped up when I clicked on this pin was a statement of “No violations.”  The app also allowed me, however, to contact DOL and report any violations.

Pretty powerful stuff here. 

Employers should be reminded that while they can often classify managers and supervisors as exempt employees, the exemption applies only if the managers and supervisors are paid on a salary basis.  Paying employees on an hourly basis destroys the exempt status of employees whose duties might otherwise be considered exempt.  For non-exempt employees, employers must include bonus payments in the calculation of an employee’s regular rate of pay and then pay 1½ times the regular rate for hours worked over 40 in a workweek.

Then, in January 2011, President Obama nominated Leon Rodriguez for the Administrator position.  Rodriguez is the Deputy Assistant Attorney General and Chief of Staff in the Civil Rights Division of the U.S. Department of Justice, where he oversees the operations of the Division and leads its work on immigration and national origin-related civil rights matters.  The White House offered no explanation for withdrawing Rodriguez’s nomination earlier this month.

So, Nancy Leppink, the Wage and Hour Division’s Deputy Administrator, continues to serve as the Acting Administrator of the agency that is charged with enforcing the Fair Labor Standards Act, Family and Medical Leave Act, Davis-Bacon Act and Service Contract Act, among other laws.  There has been no indication from the President or Secretary of Labor regarding the timing of nomination number three.

1.         The new compensation survey – On August 4^th the Office of Management and Budget (OMB) approved the Advance Notice of Proposed Rulemaking (ANPRM) for compensation data collection by OFCCP from federal contractors.  OFCCP will seek input from stakeholders on issues relating to the scope, content and format of the tool to ensure that it is an effective and efficient data collection instrument.  We anticipate publication of the ANPRM in the Federal Register during the week of August 8^th.

3.         Revised scheduling letter and itemized listing – The current scheduling letter expires September 30, 2011.  Following the closure of the comment period on July 11 regarding the proposed revised scheduling letter, OFCCP will issue a revised letter that will be implemented on and after October 1, 2011.  The revised scheduling letter will be published in the near future – either in August or September.

Stay tuned – federal contractors will have plenty of August vacation reading!

Liff was paid approximately $700,000 to review VETS management operations and provide options on how VETS could better measure its success in meeting performance goals.  According to the IG’s report, Liff had written a book suggesting that agency performance could be improved by using visible charts and changing furniture, colors and lighting.  Pretty expensive interior design work for a government agency, particularly considering the fact that the paint Liff recommended for VETS was not permitted under the General Services Administration’s regulations!

The IG also found that Jefferson hired Ronald Kaufman, a friend, to provide training for VETS employees, again without competition, and that Jefferson improperly endorsed Kaufman’s products on the VETS intranet site.  The report also determined that Jefferson had pressured VETS employees to enter into a contract with Mark Tribus, an associate, in violation of procurement rules.

The IG’s investigation was initiated after that office received a complaint from a former VETS employee.  According to the report, prior to the issuance of the IG’s report, Department of Labor officials had taken steps to restrict the procurement authority exercised by VETS officials.

The preliminary plan sets forth the following factors and processes that DOL says it will use in setting priorities for reviewing existing regulations:

• Stakeholder input
• Impact on small businesses
• Age of the regulation:  Older regulations may be prime candidates for review, “particularly if the regulated activity or industry has been affected by technological changes that impact safety or compliance.”
• Number of entities/workers affected, with priority given to regulations that affect the greatest numbers of entities or workers.
• Evidence of non-compliance:  DOL will determine whether non-compliance is related to confusion about how to comply with the regulation.  Employers should note that DOL states that data from across DOL’s agencies will be available through a planned procurement in FY 2011 that will aid in these efforts.
• Relationship of regulations to accidents, injuries, security or equity.  DOL states that a high number of fatalities or injuries, for example, may indicate that the regulation is inadequate or that compliance is a problem, and that a decrease in such occurrences may indicate that the regulation may be working as intended.
• Paperwork associated with a regulation
• Petitions for modification or exemption
• Technological advances and new scientific research
• Transparency and clarity.

DOL’s preliminary plan may be found on the FortneyScott website.

Tiao has served as an Assistant U.S. Attorney for the District of Maryland since 2002, and since March 2009 has been on detail to the FBI as Special Counsel to the Director.  He was also previously detailed as Counsel to the Senate Judiciary Committee from 2007 to 2008, where he drafted legislation and provided advice on a variety of criminal and national security issues.  In between stints in the government, Mr. Tiao practiced law at Wilmer Cutler & Pickering as a litigator.

DOL’s foray into the world of smartphones underscores for employers the need to keep accurate records of the hours their employees work and to encourage their employees to speak to human resources personnel if they have questions about their pay.

1. The internship, even though it includes actual operation of the facilities of the employer, is similar to training which would be given in an educational environment;
2. The internship experience is for the benefit of the intern;
3. The intern does not displace regular employees, but works under close supervision of existing staff;
4. The employer that provides the training derives no immediate advantage from the activities of the intern; and on occasion its operations may actually be impeded;
5. The intern is not necessarily entitled to a job at the conclusion of the internship; and
6. The employer and the intern understand that the intern is not entitled to wages for the time spent in the internship.

As the Fact Sheet notes, if an employer uses interns as substitutes for regular workers or to augment its existing workforce during specific time periods, these interns should be paid at least the minimum wage and overtime compensation for hours worked over forty in a workweek. 

DOL had always taken the position that an employee’s request to use comp time on a specific date must be granted unless doing so would unduly disrupt the agency’s operations.  The Courts of Appeals for the Fifth and Ninth Circuits, however, both declined to defer to DOL's regulations because they found the plain language of the statute to require only that an employee be allowed to use comp time within a reasonable period of the date requested unless doing so would unduly disrupt the agency. 

DOL’s proposed regulation, published by the Bush Administration in 2008, stated that the law does not require a public agency to allow the use of comp time on the day specifically requested, but only requires that the agency permit the use of the time within a reasonable period after the employee makes the request, unless the use would unduly disrupt the agency’s operations. 

Many comments were received on both sides of the issue.  After the publication of the proposal, the Court of Appeals for the Seventh Circuit disagreed with the Fifth and Ninth Circuit decisions, and held that because the statutory terms, “reasonable” and “undue” are very open-ended DOL's long-standing interpretation was reasonable and entitled to deference.

DOL decided to reject the proposed revision to the regulation and to maintain its position that employees are entitled to use comp time on the date requested absent undue disruption to the agency.  DOL also stated that the fact that overtime may be required of one employee in order to permit another employee to use comp time not a sufficient reason for the employer to claim that the comp time request is unduly disruptive.

DOL reviewed comments regarding the ownership of employee tips, and concluded that tips are the property of the employee, and that the only permitted uses of an employee’s tips is through a tip credit or a valid tip pool among only those employees who customarily and regularly receive tips.  DOL rejected a recent decision from the Court of Appeals for the Ninth Circuit in Cumbie v. Woody Woo, Inc., 596 F.3d 577 (9th Cir. 2010).  The court held that the requirement that mandatory tip pools include only those employees who customarily and regularly receive tips does not apply when the employer does not claim a tip credit toward the payment of the minimum wage.

DOL also addressed the issue of whether there is a limitation of the amount of tips an employee can be required to contribute to a tip pool.   In opinion letters and in litigation, DOL had stated that a tip pooling arrangement cannot require employees to contribute more than 15 percent of the employee’s tips or two per cent of daily gross sales.  Several courts have rejected the agency’s maximum contribution percentages, however.

DOL had proposed in 2008 to state that the FLSA does not impose a maximum tip pool contribution percentage, but that an employer must notify its tipped employees of any required tip pool contribution amount.  In response to comments received on both sides of the issue, DOL's final regulation provides that the statute does not impose a maximum contribution percentage on valid mandatory tip pools, which can only include those employees who customarily and regularly receive tips.  However, an employer must notify its employees of any required tip pool contribution amount, may only take a tip credit for the amount of tips each employee ultimately receives, and may not retain any of the employees’ tips for any other purpose.

Regardless of how the data is submitted (by job group, job title, SSEG), OFCCP now will flag either a 2% or a $2,000 pay difference in average compensation between protected and non-protected employees (women/men, minority/non-minority) in even one job grouping as an “indicator” of potential discrimination.  So, a contractor will be subject to further investigation even if compensation in many other job groups favors protected group members.  Of course, OFCCP chooses to ignore the fact that such small pay differences, while common, are not indicative of statistical significance.   

Virtually every audited contractor is sure to fail this pseudo-screen. An audited contractor should run its own version of OFCCP’s “2 by 2” test, on a privileged basis, and then submit more detailed compensation data only for the job groups flagged rather than the entire workforce.

In a fluctuating workweek, an employee works fluctuating hours from week to week and receives, pursuant to an understanding with the employer, a fixed salary as straight-time compensation for whatever hours the employee is called upon to work.  In such cases, the employer satisfies the overtime pay requirements of the FLSA if it compensates the employee, in addition to the salary amount, at least one-half of the regular rate of pay for the hours worked in excess of 40 hours in each workweek.  

According to DOL, the comments were sharply divided.  Commenters representing employers favored the revisions, while commenters representing employees strongly opposed them.  DOL ultimately decided to reject the proposed revisions.

Prior to her tenure at the New York State Department of Labor, Ms. Brand served for 20 years in the Labor Bureau of the New York State Attorney General’s office as a staff attorney, Section Chief, Deputy Bureau Chief and finally as Bureau Chief.  She has an undergraduate degree from Barnard College, a law degree from Columbia University and a Masters degree in public policy from Princeton University.   

Unlike the position of Solicitor of Labor, the Associate Solicitor position is a career position, which means that Ms. Brand's tenure at DOL may extend beyond the current Administration.

BLS, which is part of the U.S. Department of Labor, uses two different surveys to get the unemployment rate and the number of jobs added each month. The "household survey," or Current Population Survey (CPS), involves asking people, from about 60,000 households, a series of questions to assess each person in the household's activities, including work and searching for work. Their responses give BLS the unemployment rate. The "establishment survey," or Current Employment Statistics (CES), surveys 140,000 employers about how many people they have on their payrolls. These results determine the number of jobs being added or lost.