Date: May 01, 2014
Magazine:
May 2014 Irrigation Advances

Frustrated by his failure to get his employment law agenda through Congress, President Obama earlier this year promised to bypass Congress and act unilaterally to get things done.  “I’ve got a pen and I’ve got a phone,” he famously said.  The president has turned his attention to income inequality, and making changes to federal employment and labor law by fiat is central to that strategy.

In February of this year, Obama signed an executive order requiring a minimum wage of $10.10 for federal contract workers.  The order, which will go into effect Jan. 1, 2015, applies only to future federal contracts.  The announcement elicited muted praise from progressives who lobbied the White House to raise the wages of current federal contract workers.  Progressive Democrats are looking for more and nothing less than a raise to the overall federal minimum wage will do.  He can’t do that without approval from Congress.  That’s why the president is calling on Congress to gradually raise the minimum wage to $10.10 by 2016. Legislation sponsored by Sen. Tom Harkin, D-Iowa, would do just that.

In the meantime, federal contractor employers should review any existing contracts or potential contract bids that may be subject to the Executive Order and determine whether any employees who perform or will perform under the contract earn less than the new minimum wage.  They should also consider any possible increased contract costs based on the wage increase.  Federal contractors should also track DOL regulations to reevaluate potential contract costs and action items under the Order, including:

•             Identifying contracts subject to the Order;

•             Implementing steps to renew or rebid existing contracts; and

•             Adding any required language to subcontracts.

All employers should have a system in place to review any contracts that may involve work with the federal government, either directly or as a subcontractor, before the contracts are signed to avoid unintentionally becoming a federal contractor subject to regulatory compliance, including the minimum wage.

In March, the president picked up the phone and directed the Labor Secretary to revamp regulations governing which types of employees businesses can classify as exempt from overtime.  The proposal would increase the weekly pay for exempt employees from $455 per week to a higher amount thus making more workers eligible for overtime pay.  In California, that minimum is already $640 (jumping to $720 in July), and the state’s exemption rules are already tougher than what is expected to come down from the Labor Department, so these changes won’t have much impact on employers in the Golden State.  And in Arizona, agricultural employees are exempt from overtime, so those workers won’t be affected either.  But outside of California and outside of Ag (e.g., office staff), exempt workers who are currently being paid at or near the $455 per week minimum threshold and are working more than forty hours in a workweek will likely either have to be given a raise in their salaries or overtime compensation for their overtime hours worked.

But any changes won’t happen overnight.  Indeed, before any amendments to the regulations can be implemented, the DOL must first propose rule changes and afford an opportunity for public comment.  In the meantime, however, employers should audit and review their employees who are currently classified as exempt to make sure they are properly classified.  Once new regulations are promulgated, employers should review their job classifications to ensure they are in compliance with the new rules.

The president’s other major administrative tool, the National Labor Relations Board (NLRB), has been particularly active as well.  The NLRB reissued its “quickie election” rule in a new Notice of Proposed Rule Making.  The Board previously issued this proposed rule back in June 2011, and a final, slimmed-down version was later struck down by federal courts for procedural reasons.  However, the new rule is not the scaled-back version, but is in substance “identical to the representation procedure changes first proposed in June of 2011.”  While business groups are sure to challenge a final rule as soon as it is issued, employers should begin preparing for the implementation of the rule, since legal challenges may not prevent the Board from implementing the Rule, at least initially.

Even if you don’t follow the NLRB or college football, you probably have heard that the NLRB recently ruled that Northwestern University’s football players who receive scholarships are “employees” under the National Labor Relations Act and have the right to form a union.  If you think this decision is not relevant to you because you don’t represent a private college or university, think again.  This unprecedented ruling is consistent with other recent Labor Board decisions establishing new law or reversing long-standing decisions, which make the National Labor Relations Act more favorable to labor unions.

Hold the phone!  This agenda is unlikely to change any time soon.

WG Staff Contact

Jason Resnick
Vice President & General Counsel
949-885-2253

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