Previously, Personnel Concepts reported that two final rules were released by the U.S. Department of Labor (DOL). Specifically, one of the final rules announced in April 2024 focused on new overtime protections. The other rule focused on representation during Occupational Safety and Health Administration (OSHA) workplace inspections. Since mid-May, however, multiple business groups filed lawsuits seeking to block the DOL’s final rules. Accordingly, the two cases (both filed in separate Texas district courts) could be blocked before fully taking effect.
Final Rule on Employee Representation During OSHA Inspections
Under Section 8(e) and (f) of the OSH Act, employer and employee representatives can accompany a compliance officer during inspections. Furthermore, this representative may aid OSHA officials in completing a thorough investigation. The authorized representative helps inspectors gather information about the worksite’s specific conditions and safety hazards. Section 8(e) also clarifies that “when there is no authorized employee representative, the Secretary or his authorized representative shall consult with a reasonable number of employees concerning matters of health and safety in the workplace.” All in all, employees and authorized employee representatives may also take the following actions:
- Request such safety inspections when safety violations or imminent danger exists;
- Notify inspectors in writing of any safety violations they reasonably believe exist in the workplace; and
- Have access to and review safety records the employer must maintain.
Generally, OSHA’s final rule clarifies that employees may authorize employee representation during OSHA inspections. Markedly, employees may authorize a non-employee third party. However, this is only if the compliance officer determines the third party is reasonably necessary to conduct an effective and thorough inspection. The new rule also clarifies that the OSH Act does not limit third-party representatives to hygienists or safety engineers. Third-party representatives outside the two examples mentioned can be reasonably necessary. This applies if they have the skills, knowledge, and experience that may help inform a compliance officer’s inspection. Specifically, such information may include knowledge or expertise with workplace hazards or similar workplace conditions. It could also involve possessing language or communication skills to ensure an effective and thorough inspection.
Arguments to Block the OSHA Inspection Final Rule
In Civil Action No. 24-271, filed in the Western District of Texas, numerous business groups led by the U.S. Chamber of Commerce sued OSHA over its latest final rule. Markedly, the lawsuit claims that the new rule (effective May 31st, 2024) changes the definition of “default representation.” Under the final rule, employees and third-party representatives not affiliated with the employer, such as non-employee union organizers, could act as representatives. Critics argue that the rule allows unions access to non-union workplaces for union-organizing activities. Also, third parties on-site may jeopardize trade secrets and commercial information confidentiality.
Final Rule on Overtime Protections
As the nation’s primary wage law and one of the major employment laws employers must follow, the Fair Labor Standards Act (FLSA) establishes minimum wage and overtime protections for non-exempt part-time and full-time employees. However, under section 13(a)(1) of the FLSA, employees paid above the FLSA’s current salary basis are generally exempt from overtime provisions. To qualify for overtime exemption, employees must be paid on a salary basis at not less than $684 per week. These exempt employees must also perform at least one of the duties of an executive, administrative, or professional employee.
Explicitly, the DOL’s final rule increases the salary threshold for overtime exemption under the FLSA to $844 per week ($43,888 per year). This means that salaried employees who earn less than $43,888 a year would be eligible for overtime pay. Indeed, the DOL seeks to extend overtime protections to millions of low-paid salaried employees. According to the DOL, many of these low-paid salaried employees work alongside hourly employees and do the same tasks. Like their hourly counterparts, they often work over 40 hours in a workweek. However, they are not paid an overtime rate for those hours.
Presently, the rule’s effective date is July 1st, 2024. On January 1st, 2025, the overtime threshold will increase to $1,128 per week ($58,656 annually).
Finally, the overtime threshold for highly compensated employees (HCEs) will also change. Beginning on July 1st, 2024, the annual compensation level for HCEs to be exempt from overtime pay will increase from $107,432 to $132,964. On January 1st, 2025, that level will rise to $151,164.
Future updates to the salary and compensation levels will occur every three years. Those updates will apply updated wage data to the regulations. The next three-year update will take place on July 1st, 2027.
Arguments to Block the Overtime Protections Final Rule
On May 22nd, 2024, more than a dozen business groups and a company filed a lawsuit to block the DOL’s new overtime rule. The lawsuit, Plano Chamber of Commerce v. U.S. Department of Labor, was filed in the U.S. District Court for the Eastern District of Texas. Specifically, the plaintiffs argue that the DOL “acted arbitrarily, capriciously, and otherwise not in accordance with the law.”
Moreover, according to Ogletree Deakins, the lawsuit states, “[T]he Department has failed to adequately justify the dramatic change in policy embodied in the Rule, failed to take into account the strong reliance interests of the regulated community, and failed to meaningfully consider reasonable alternatives, all in violation of the Administrative Procedure Act.”
Employer Takeaways
In conclusion, employers affected by either one or both of the DOL’s final rules should watch for the Texas district court rulings. Even if the courts find that the final rules are legal as drafted, it is possible that these and any other legal challenges could delay the implementation dates. Until any decisions are made, however, employers should still try to comply with the original effective dates as directed by the DOL.