Roetzel partner Matt Austin is interviewed on WBNS 10TV in Columbus, Ohio in regard to the possible unionization of some college athletes.

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President Obama Orders Revisions to Rules on Overtime Pay

President Obama signed a memorandum yesterday that has the potential to greatly expand the number of employees who qualify for overtime pay under the Fair Labor Standards Act (FLSA). The President’s Memorandum is designed to raise the wages of low salaried workers, such as fast food restaurant managers and convenience store managers. Currently, most of these employees are classified as executive or professional employees and are therefore exempt from the overtime pay requirements of the FLSA. These employees are exempt as long as their job duties meet the requirements for the specific exemption and they are paid at least $455 per week. The President seeks to increase the $455 per week salary level; however, the exact increase is unclear. California and New York have thresholds of $640 and $600 per week, respectively. Additionally, the President’s Memorandum referred to FLSA exemptions as “outdated.” As such, it is expected that the regulations issued by the Department of Labor (DOL) will alter the “primary duty” test for FLSA exemptions, or even abandon the “primary duty” test in favor of more stringent standards. 

The DOL will be responsible for issuing the new regulations, which will be subject to public comment. It will be important for employers and business organizations to review the proposed regulations and submit comments to the DOL during the comment period. In the meantime, employers may want to proactively audit their workforce and job descriptions.

Contact: Jon Secrest



Treasury Announces Simplified Employer Reporting Requirements under the Affordable Care Act

On March 5, 2014, the Department of the Treasury announced changes to the employer reporting requirements under the Affordable Care Act (ACA). Generally, the ACA requires employers to report information to the IRS regarding the health care coverage they offer to full-time employees (known as Section 6056 reporting). It also requires information reporting by insurers, self-insuring employers, and other entities that provide health coverage to individuals (known as Section 6055 reporting).

The changes announced by the Treasury are designed to “streamline” the ACA’s reporting requirements. Self-insuring employers will be permitted to use a single combined form for both Section 6055 and Section 6056, thereby avoiding duplicative reporting. The top half of the form will include the information needed under Section 6056, and the bottom half will include the information needed for Section 6066. Self-insuring employers will be required to complete both parts of the form. Employers that do not self-insure will complete only the top section of the form. Employers that have fewer than 50 full-time equivalent employees will continue to be exempt from the employer reporting requirements.

The Treasury and the IRS also attempted to simplify the reporting process for employers that provide a “qualifying offer” of health insurance to full-time employees. A qualifying offer is an offer of minimum value coverage that provides employee-only coverage at a cost to the employee of no more than 9.5% of the federal poverty line. Employers will only need to report the names, addresses, and taxpayer identification numbers of employees who receive qualifying offers for a full year. Additionally, if the employer offers affordable, minimum value coverage to at least 98% of its employees, then the employers does not need to identify the employees that are full-time. Instead, it can simply report which employees “may” be full-time.

In a separate announcement, also on March 5, 2014, the Department of Health and Human Services stated that it would allow individuals to keep insurance plans that do not meet the ACA’s coverage requirement for an additional two years. The Obama administration faced criticism after ACA went into effect and insurers cancelled many of these plans, which typically offer minimal coverage and high deductibles in exchange for lower premiums. As a result of this new delay, individuals will be permitted to keep these so-called “bare bones” or “catastrophic” plans until the end of 2016.

Contact: Nathan Pangrace


Third Circuit Affirms Department of Labor’s Ability to Set Foreign Worker Wages

The Third Circuit Court of Appeals in Louisiana Forestry Association Inc., et al v. Oates, et al affirmed the Department of Labor’s ability to set wages for foreign guest workers. The ruling allows the Department of Labor (“DOL”) to regulate the minimum wage a U.S. employer can offer a foreign worker as part of the H-2B visa program. This program allows U.S. employers to recruit and employ non-skilled, non-agricultural foreign workers to fill positions that cannot be filled by American workers.

Under the current setup, an employer must receive a temporary labor certification from the DOL, which verifies that that no qualified American workers will take the job in question and that American workers will not be adversely affected by the employment of foreign workers. As part of this determination, the DOL will calculate a prevailing wage for the area of intended employment. Once this certification is issued, the employer must then file an application for an H-2B visa with the Department of Homeland Security (“DHS”), who has the ultimate authority to either deny or grant the visa petition. The rule governing the prevailing wage calculation, the 2011 Wage Rule, was at the heart of this litigation.

The 2011 Wage Rule was challenged by a group of associations representing employers who recruited workers under the H-2B visa program. The group’s arguments rested primarily on the contention that the DHS unlawfully sub-delegated its authority to the DOL as it related to the H-2B program. The group challenged the DOL’s authority to issue a rule regulating the calculation of minimum wage, as well as the rule’s compliance with both the Administrative Procedure Act and the Immigration and Nationality Act. Their arguments were rejected by the District Court for the Eastern District of Pennsylvania, and they subsequently appealed.

The Third Circuit held that, because the DHS conditioned its own granting of an H-2B visa on the DOL’s grant of a temporary labor certification, the wage rule in question was therefore issued pursuant to this “conditioning.” Essentially, the DOL has the power to issue rules as they relate to the grant of the temporary labor certification, even though the ultimate determination of an H-2B visa still rests with the DHS. Therefore, there was no unlawful sub-delegation, and the court declined to address any further authority issues.

Employers who hire H-2B employees will have to continue complying with the wage requirements established by the DOL during the H-2B process, and that could mean future increases in wages for the guest workers. The ruling ensures that U.S. workers have equal opportunity to apply for these jobs, that employers who do not hire H-2B guest workers but rely on U.S. workforce will not be under-bid, and that H-2B guest workers who come to the United States to work in what are often very physically demanding jobs, are not exploited.

Contact: Marcus Pringle