Synopsis: Hold Your Payroll for December 1st! Eastern District of Texas Federal Court Issues Nationwide Injunction Against U.S. DOL Increases For “White Collar” Salary Exemptions, Analysis by Bradley J. Smith, J.D.
Editor's Comment: Late this week, United States District Judge Amos L. Mazzant (an Obama appointment) thwarted Obama’s Department of Labor’s Final Rule described at 81 Fed. Reg. 32,391 by enjoining it from taking effect on December 1, 2016. The injunction was a blow to the law that was already causing U.S. employer’s headaches about how to afford and implement the salary changes to stay in line with the law, which requires lots more overtime pay than in the past. Specifically, Judge Mazzant enjoined the DOL from implementing and enforcing the following regulations as amended by 81 Fed. Reg. 32,391: 29 C.F.R. §§ 541.100; 541.200; 541.204; 541.300; 541.400; 541.600; 541.602; 541.604; 541.605; and 541.607. If you are an employer in the USA, then his ruling likely affects you!
The ruling affects the “white collar” exemption. You may be asking yourselves, what happened and how did we get here? President Obama wanted to give the “middle class” a raise. On March 23, 2014, President Obama told the Secretary of Labor to increase the existing “white collar” exemptions in FLSA. The DOL did so. Next week, December 1, 2016, the DOL’s Final Rule would have increased the minimum salary level to entitle “white collar” employees to overtime from $455 per week ($23,660 annually) to $921 per week ($47,892 annually).
The rule would require U.S. employers to
§ Pay these newly eligible managers time and a half for overtime;
§ Raise their salaries to render them ineligible for OT;
§ Lock in the manager’s hours at 40 hours a week;
§ Some combination of the above.
The DOL’s Final rule also allows for automatic increases in those levels every three years, starting on January 1, 2020. Fortunately, for U.S. employers wondering where the additional money (or necessity of monitoring hourly employees' overtime work) would come from, this ruling puts the DOL Final Rule on hold. This will save employers a ton of additional money and resources! We have heard from multiple emloyers struggling with how they were going to comply with the new rule. Well, for now, you don’t have to. And there is the possibility this is all going to end.
In short, the new overtime rule is most likely dead after Judge Mazzant issued a preliminary injunction Tuesday delaying its implementation during pending litigation, which was to start Dec. 1. Judge Mazzant of the Eastern District of Texas hinted strongly in his decision the delay is a prelude to striking down the rule. “The State Plaintiffs have shown a likelihood of success on the merits,” he wrote, “because the Final Rule exceeds the Department’s authority.” In issuing the rule, he wrote, the Labor Department "ignores Congress’s intent by raising the minimum salary threshold such that it supplants the duties test … if Congress intended the salary requirement to supplant the duties test, then Congress, and not the Department, should make that change.”
For the time being, you should know that the overtime rule will not take effect on December 1, 2016. Although the DOL has legal options, they will likely take some time. And there will almost certainly be new administrators from the incoming administration at the U.S. DOL.
The options are likely as follows;
· The DOL appeals the injunction to the Fifth Circuit, which probably would not issue an opinion until 2017.
· A lame-duck Congress quickly compromises with a bill for President Obama’s signature.
· The DOL does nothing and awaits Judge Mazzant likely implementing the injunction permanently after a trial on the merits.
· President-Elect Trump addresses it after being sworn in on January 20.
While the DOL is likely to appeal to the Fifth Circuit Federal Appellate Court, the timing of this decision leaves the fate of this rule in the hands of the 115th Congress and the Trump Administration. However, there is always a chance that this injunction could be flipped on appeal, so this is something we will be monitoring in the coming weeks.
What do U.S. employers do now? How will you balance the cost savings of a “do-over” for the employees whose salaries you raised against the morale hit lowering their salaries—especially at this time of the year—will cause? Do you reconvert the employees? Will you re-hire some of the folks you laid off when anticipating the increased costs? These are difficult questions; however, if your business costs were going to increase to a level that was unmanageable due to the increase in EAP salary, then you probably have an obvious answer to your questions. For everyone else, individual assessments will likely be required.
The research and writing of this article was performed by Bradley J. Smith, J.D. with the help of the Editor-in-Chief, Eugene F. Keefe, J.D. Bradley or Gene can be reached with any questions regarding the FLSA, employment law, and general liability defense at email@example.com or firstname.lastname@example.org.
Synopsis: Outbound OSHA Administration Issues Massive New Fall Protection Rule—Can It Withstand Legal Challenges and the New Trump Administration?
Editor’s comment: Despite a Congressional “request” federal agencies like OSHA not promulgate new regulations during the transition to the Trump administration, the zealots at the Occupational Safety and Health Administration recently issued a gigantic 513 page final rule effectively re-writing its general industry standards on walking-working surfaces, including ramps, ladders, gangways, roofs, and other surfaces. While this rulemaking has been in the works for about three decades, the original 293 page proposed rule was published at 75 Fed. Reg. 28861 on May 24, 2010. About six years later, without any advance warning, OSHA promulgated the final rule and provided only sixty days for your compliance.
For a variety of reasons, this rule may be subject to the same legal attack as the FLSA mess reported by Brad Smith in the article above. It may also be “Trumped” or blocked by the inbound administration—they assert they don’t want more government regulation and here is one such complex morass of new rules for U.S. business to deal with.
The final rule includes new and unprecedented provisions addressing fixed ladders, rope descent systems, fall protection systems and criteria, and training. Further, their final rule adds requirements on the design, performance, and use of personal fall protection systems. Please note some of these rules were already in place for the construction industry—the new fall protection rule expands the scope to general industry.
Outbound OSHA Administrator Dr. David Michaels said the “rule will increase workplace protection from those hazards, especially fall hazards, which are a leading cause of worker deaths and injuries.” “OSHA believes advances in technology and greater flexibility will reduce worker deaths and injuries from falls.” Dr. Michaels claims the rule should also increase the “consistency between general and construction industries, which will help employers and workers that work in both industries.”
According to OSHA, the “rule’s most significant update is allowing employers to select the fall protection system that works best for them, choosing from a range of accepted options including personal fall protection systems. OSHA has permitted the use of personal fall protection systems in the construction industry since 1994 and the final rule adopts similar requirements for general industry. Other changes include allowing employers to use rope descent systems up to 300 feet above a lower level, prohibiting the use of body belts as part of a personal fall arrest system, and requiring worker training on personal fall protection systems and fall equipment.”
The new standard should affect 6.9 million establishments employing a whopping 112 million employees. OSHA also found the ladder training rules will apply to 5.2 million employees engaged in the construction, installation, maintenance, repair, and moving operations in general industry. For almost all our readers who are U.S. risk and safety managers, if this new rule isn’t blocked by legal action or the new administration, you will need to obtain and set fall protection training at your facilities asap.
Excluded from the new rules are employees outside of OSHA’s jurisdiction due to location or operational status, such as Department of Transportation (railroad and trucking) responsibilities, or those subject to industry-specific fall protection standards, such as telecommunication and electric power generation, transmission, and distribution.
OSHA estimates full compliance with this rule would prevent over 5,800 injuries and 29 fatalities per year. In my view, that is based on hopes and prayers.
Timeline—You May Not Be Surprised to See it Starting Three Days Prior to the Trump Inauguration!
The rule will be effective beginning Tuesday, January 17, 2017; Trump is inaugurated that Friday, January 20, 2017.
Some provisions have delayed effective dates, including:
ü May 17, 2017 – Train employees on fall and equipment hazards;
ü July 17, 2017 – Insure exposed workers are trained on fall hazards;
ü July 17, 2017 – Insure workers who use equipment covered by the final rule are trained;
ü November 20, 2017 – Inspect and certify permanent anchorages for rope descent systems;
ü November 19, 2018 – Install personal fall arrest or ladder safety systems on new fixed ladders over 24 feet and on replacement ladders/ladder sections, including fixed ladders on outdoor advertising;
ü November 19, 2018 – Insure existing fixed ladders over 24 feet, including those on outdoor advertising structures, are equipped with a cage, well, personal fall arrest system, or ladder safety system;
ü November 18, 2036 (yes, twenty years from now) – Replace cages and wells (used as fall protection) with ladder safety or personal fall arrest systems on all fixed ladders over 24 feet.
We caution compliance with this giant new rule will represent a major challenge for U.S. employers, due to the effective date of the regulations. It will require all U.S. employers to meet these same rules and requirements for your outside contractors, temporary and staffing/leased employees who may be at the worksite under OSHA’s “multi-employer” worksite doctrine.
Will It Last?
This new OSHA Rule will come under review by the Trump administration or be subject to the Congressional Review Act where lawmakers have 60 legislative days to overturn a regulation from the current or, in this case, previous administration. If lawmakers are not in session for a full 60 days after enactment of the new rule before adjourning their final session, the clock resets, and the new Congress is given another 60 days to act on the new rule.
Does KCB&A Do OSHA Defense?
Yes, we most certainly do and at hourly rates half of some competitors. You don’t need to spend $500, 600 or more per hour to resolve OSHA disputes and pay your defense lawyer so much to defend you that you have to be in a lose-lose situation. If you have an issue with OSHA or need advice at any future time, please call or email and we can help.
The research and writing of this article was performed by Bradley J. Smith, J.D. with the help of Editor-in-Chief, Eugene F. Keefe, J.D. Bradley or Gene can be reached with any questions regarding the FLSA, employment law, and general liability defense at email@example.com or firstname.lastname@example.org.
Synopsis: IL WC Impairment Rating Ignored… Again. Analysis by Lilia Picazo, J.D.
Editor’s Comment: In 2011, impairment ratings were brought to the IL WC matrix to try to bring the value of permanency or what can now be called ‘impairment’ down to make it more palatable for IL employers. The goal of the reforms was to bring IL WC awards more in line with our sister states. There has been substantial push-back on this concept by our hearing officers, all of who report directly to the Governor. We will see when and if the secret-powers-that-be who run IL WC might encourage them to drop PPD awards consistent with impairment ratings—for now, the jury remains out on lower PPD values based on impairment ratings in claims like this. In our view as defense lawyers, there is still value in getting a rating.
In Flexible Staffing Services v. Illinois Workers' Compensation Comm’n, the Illinois Appellate Court, WC Division ruled the IWCC properly applied Section 8.1b of the IL WC Act when it awarded PPD benefits at a more traditional and high level to Petitioner. Basically, the impairment rating was wholly ignored to the chagrin of employers, claims handlers, risk managers and insurance carriers across our state.
Petitioner, a welder-fabricator, was welding a 400-lb. section of a rail when he sustained a right distal biceps tendon rupture from attempting to grab it as it fell from a saw-horse. Petitioner underwent right elbow repair and physical therapy. Petitioner testified he complained of continued pain and lack of full range of motion when his treating provider released him to full duty. Respondent’s examiner calculated Petitioner’s level of impairment at 6% of the upper extremity.
The Arbitrator awarded 30% loss of use of the right arm or five times the level of impairment. The IL WC Commission modified the award and determined Petitioner suffered 25% loss of use of the right arm, but did not provide any analysis or reasoning. The trial court remanded the case back to the IL WC Commission and instructed the Commission to provide facts and reasoning relied upon to modify the Arbitration decision, consistent with the statute.
On remand, the Commission applied the factors set forth in Section 8.1b of the Act and noted the 6% impairment rating did not adequately represent Petitioner’s disability. The Commission reasoned a finding in favor of the rating would disregard the other factors set forth under Section 8.1b. In our view, they completely disregarded the rating, to focus on other factors. With respect to the Commission panel, we don’t feel that appropriately meets the statutory requirement.
On appeal to the IL Appellate Court, WC Division Respondent made two arguments:
First, Respondent argued the Commission misapplied section 8.1b as a matter of law because it “considered factors for which no evidence was present in the record.” The Appellate Court found Respondent did not identify an error of law. It read the Commission decision as having sufficient evidence for all factors it considered under Section 8.1b prior to modifying the award.
Second, Respondent argued the Commission misapplied section 8.1b as a matter of fact. Respondent argued there was no evidence to support consideration of Petitioner’s occupation, the relationship between Petitioner’s age and his level of disability, Petitioner’s future earning capacity, or evidence of disability corroborated by the medical records. Respondent further argued there was no evidence to support an assertion Petitioner was more prone to future injury.
Although the Appellate Court noted it was unclear whether the IL WC Commission meant a future physical injury or economic injury, it reasoned it was not within its scope to rebalance the factors set forth in Section 8.1b(b) or to substitute its reasoning for that of the Commission.
The Appellate Court noted the Commission’s application of Section 8.1b was not against the manifest weight of evidence and affirmed the decision of the IL WC Commission.
Editor’s note: As I have told our readers on multiple occasions, I don’t see any value in having the defense side of an IL WC claim bring disputes of this nature to this very liberal appellate panel. In the view of your editor, it is a complete waste of time and money because they almost never rule for the defense side of an IL WC claim. While we can’t be sure, it would almost appear an adjuster from this major national insurance carrier wanted a published decision to demonstrate impairment ratings don’t have value in IL WC. We disagree with that view and consider ratings to have value in settlement discussions, pretrials and hearings.
This article was researched and written by Lilia Picazo, J.D. You can reach Lilia at any time for questions about workers’ compensation at email@example.com.