On January 11, 2013, the Department of Labor (DOL) published a notice in the Federal Register requesting public comments on its “proposal to collect information about employment experiences and workers’ knowledge of basic employment laws so as to better understand employees’ experience with worker misclassification.” 78 Fed. Reg. 2447 (Jan. 11, 2013). This survey may signal the DOL’s intention to move forward with “Right to Know” rules originally contemplated in 2010 but never formally proposed, or with other similar regulations that would affect the way employers classify workers.
In 2010, the DOL announced its intention to update the recordkeeping regulations under the federal Fair Labor Standards Act (FLSA) to require, in part, that employers who classify a worker as an exempt employee or independent contractor prepare a written explanation as to why that individual is classified as such. The explanation would then be provided to both the worker and the DOL. Additionally, for workers classified as employees, the employer would need to provide information on how it computes the pay of those employees.
As employers are not currently required to notify workers or the DOL of the workers’ status, and they are not required to provide information to all employees on how their pay is calculated, these regulations would place an added burden on employers. Further, considering the increasing amount of wage and hour litigation, this type of rule may lead to even more lawsuits filed on behalf of workers alleging they were misclassified.
After indicating in late 2010 and early 2011 that it would issue proposed rules on the “Right to Know under the Fair Labor Standards Act,” the DOL failed to do so. Instead, in the fall of 2011, the DOL changed the “Right to Know” rule from its previous Proposed Rule Stage to the status of Long-Term Action. “Long-Term Actions” are items that are under development but for which the agency does not expect to have a regulatory action within the 12 months after the date on which the regulatory agenda is published. Despite the suggestion that it would take no immediate action, however, the DOL maintained that the “Right to Know” regulation remained on its to-do list. Acting Wage and Hour Administrator Nancy Leppink stated in early 2012, “We’re continuing to work on that regulation...We’re learning about what the issues are.” Gayle Cinquergrani, Wage and Hour Division Forges Ahead with Misclassification Enforcement, BNA Daily Labor Report (Jan. 24, 2012).
The DOL’s proposed survey, intended to obtain information about the precise issues that prompted it to propose “Right to Know” rules in the first place, could mark the revival of this regulation and emphasizes the DOL’s focus on worker misclassification issues. The survey is scheduled to last until May 2014. Though this evaluation may result in burdensome regulations down the line, the DOL’s notice suggests it will hold off on placing additional requirements on employers regarding employee classifications in the near future. For now, employers should continue to exercise caution in classifying workers, and remain mindful of the current and developing wage and hour law.© 2013 Vedder Price