Spring Agenda published — Dog days of summer could heat things up for employers in August

The Spring 2023 Unified Agenda of Regulatory Actions was released today. This bi-annual agenda offers a look at what federal agencies are working on and gives employers a heads-up on final (or proposed) changes that could impact businesses.

Below are a few key agenda items to note.

Final Rules

Davis-Bacon Act: In June, a final rule to update and modernize the regulations implementing the Davis-Bacon Act (DBA) is scheduled. The rule was originally set for February 2023, but was delayed. The changes are meant to provide greater clarity and enhance usefulness of the DBA which requires the payment of locally prevailing wages and fringe benefits to laborers and mechanics as determined by the Department of Labor (DOL).

Employee or Independent Contractor: The DOL reports that in August 2023, employers can expect to see a final rule about the independent contractor status under the Fair Labor Standards Act (FLSA). In response to a recent court case, however, it seems this won’t happen until October.

In the meantime, employers should begin to evaluate their processes for classifying employees and independent contractors to prepare. Based on the language of the proposed rule, the final rule will likely:

• Align the DOL’s approach with courts’ FLSA interpretation and the economic reality test.
• Revert to the longstanding interpretation of the economic reality factors. These factors include the investment, control, and opportunity for profit or loss. The integral factor, which considers whether the work is integral to the employer’s business, is also included.
• Restore the multifactor, totality-of-the-circumstances analysis to determine whether a worker is an employee or an independent contractor under the FLSA. • Ensure that all factors are analyzed without assigning a predetermined weight to a particular factor or set of factors.
• Assist with the proper classification of employees and independent contractors under the FLSA.
• Rescind the 2021 Independent Contractor Rule.

Joint Employer: In August 2023, a final rule about joint employer relationships is scheduled. The National Labor Relations Board (NLRB) has been considering what joint employment means. Companies should prepare for a broad definition and, therefore, an increased risk for liability for noncompliance.

Proposed rule

FLSA White Collar Exemptions: In August, the DOL plans to release a proposed rule that would update the regulations regarding what’s known as the “white collar” exemption under FLSA. The rule was supposed to come out in October 2022 and then was bumped back to May 2023. This hot-topic issue generally exempts executive, administrative, professional, outside sales, and computer employees from overtime pay and minimum wage under the FLSA.

One of the primary goals of this rulemaking would be to update the salary level requirement. In prior rulemakings, there was talk of a commitment to update the standard salary level and Highly Compensated Employees (HCE) total compensation levels more frequently.

The last salary increase went into effect in January 2020 when the federal minimum salary level rose from $455 to $684 per week, and the total annual compensation for HCE increased from $100,000 to $107,432.

Key to remember: Three final rules (and one proposed rule) published in the federal Spring 2023 Unified Agenda will impact most U.S. employers. However, employers must also factor in state and local laws.